Freight rates for Very Large Gas Carriers (VLGCs) have reached their highest levels since early 2024. This surge is attributed to strong demand for liquefied petroleum gas (LPG) from Asia and India, alongside a limited supply of available vessels. The market is currently showing significant momentum, and analysts are predicting that this strength will continue throughout the second half of 2025.
Spot Rates Climb on Key Routes
According to Fearnley Securities, the spot rate for the Saudi Arabia–Japan route has increased to $70,000 per day, reflecting an 8% rise over the past week. Similarly, the Houston–Japan route has reached $66,000 per day, marking a 5% week-over-week increase. Currently, freight rates are averaging $80 per ton, and there is growing interest in cargo loadings for August, with at least nine shipments already booked.
Read also about the latest freight rates trends.
September Bookings Begin Amid Vessel Shortage
Charterers are actively securing vessels for September loadings due to limited availability. Rim Intelligence reports that rates on the Yanbu–Mediterranean route are rising, with vessels such as the Leo Green (83,300 cbm) and BW Lord (84,700 dwt) being fixed at $83–$84 per ton. Additionally, rates on the US Gulf–Asia route via the Panama Canal have increased by $4 per ton.
Trade Flow Shifts: India Turns to US LPG
According to SSY, India’s growing LPG demand is reshaping global trade flows. Indian Oil Corp (IOC) has shifted its sourcing strategy, favoring cheaper US cargoes over traditional Middle Eastern suppliers. In parallel, Abu Dhabi’s Adnoc has agreed to swap US cargoes at a discount to redirect more of its own LPG to China, where premiums are higher.
However, SSY cautions that this arbitrage-driven shift may be short-lived, depending on temporary pricing dynamics.
US LPG Exports Rise Over 5% YoY
Marsoft reports that US LPG exports have increased by more than 5% year-over-year, with new terminals and production units expected to come online in 2025–2026. This export growth, combined with limited VLGC fleet expansion, is keeping the market tight.
Global gas production—especially from the US—continues to rise, while VLGC fleet growth slows, supporting strong spot rates.
Asian Demand and Arbitrage Opportunities Fuel Market
Demand from China, India, and South Korea remains strong, with arbitrage opportunities further boosting the spot market. Fearnleys forecasts that VLGC freight rates will remain elevated in the coming months, with listed VLGC companies potentially seeing their share prices align with net asset values (NAV).
Outlook for 2025: Strong Rates to Persist
Analysts agree that the upward trend in VLGC freight rates is likely to continue through the rest of 2025, with average spot rates expected to exceed $50,000/day in the second half—especially on US–Asia routes.
If US exports continue to rise and fleet growth remains constrained, the VLGC market could see further tightening and rate increases.
Newbuild Trends: Focus on Decarbonization
According to the Port and Shipping Management Department of the National and Kapodistrian University of Athens, Q2 2025 confirmed the strength of the newbuild LNG and LPG carrier market, driven by decarbonization goals, regulatory pressure, and long-term demand for cleaner fuels.
Shipowners favor technologically advanced new builds over secondhand vessels. The S&P market remains subdued, with limited activity in LNG and only a few deals in the dual-fuel LPG segment.
The Maritime-Hub Editorial Team
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of Maritime-Hub. Readers are advised to research this information before making decisions based on it.
