Weekly Shipping Marker Review

LNG vs LPG: Fleet Expansion Dynamics

This week, Allied Quantumsea Research continues its two-part Special Focus on gas carrier fleet expansion, following last week’s analysis of LNG shipping.

Special Focus II turns to LPG shipping, where fleet expansion is mainly driven by underlying demand trends and commercial market conditions rather than by fixed, infrastructure-led projects. While LNG carrier demand is closely linked to liquefaction capacity additions, energy security considerations, and longer-term contracting, LPG trade growth is supported by petrochemical demand across Asia, alongside steady residential and industrial consumption. As a result, LPG fleet growth is more responsive to market cycles, with earnings more exposed to spot rate volatility, resulting in a different risk profile compared with LNG shipping.

SPECIAL FOCUS II LPG Fleet Expansion: A Market-Driven Growth Story

LPG fleet expansion entering 2025 continues at a measured and commercially driven pace. Unlike LNG shipping, LPG carrier investment is not attached to large-scale infrastructure projects, emissions policy frameworks, or long-term energy transition mandates. Instead, fleet growth reflects underlying consumption trends and prevailing market conditions. This results in a more cyclical market structure, with vessel supply and earnings responding directly to shifts in demand and freight rates.

Demand Drivers

Petrochemical demand remains the primary driver of LPG trade growth. The expansion of propane dehydrogenation (PDH) capacity in China and other Asian markets continues to support sustained import requirements for propane. This structural demand is complemented by steady residential and industrial LPG consumption across emerging markets, providing a relatively stable base load for global trade.

On the supply side, LPG export growth remains concentrated in the United States, the Middle East, and Russia. Rising U.S. production and export capacity, in particular, continues to support long-haul trade routes into Asia, reinforcing tonne-mile demand despite periods of freight volatility.

Policy and Energy Transition Context

LPG does not occupy the same strategic position within emissions policy or energy security frameworks as LNG. While LPG remains cleaner than coal and fuel oil, its demand growth is driven primarily by economic activity and industrial consumption rather than regulatory mandates. As a result, LPG fleet expansion aligns more closely with consumption growth and market pricing signals than with long-term policy objectives or government-backed infrastructure programmes.

Fleet Expansion Strategy

Investment in the LPG carrier fleet remains predominantly owner-led and commercially motivated. Major operators including BW LPG, Avance Gas, Dorian LPG, Navigator Gas, Exmar, Petredec, and Eastern Pacific Shipping continue to prioritise fleet renewal, fuel efficiency, and operational flexibility rather than aggressive capacity expansion. Newbuilding activity remains disciplined. Orders are typically placed in response to prevailing freight market conditions, yard availability, and expected utilisation levels rather than fixed project timelines. This ordering behaviour allows fleet growth to adjust more dynamically to demand signals and reduces the risk of prolonged oversupply.

LPG Fleet Expansion Is Driven by High-CBM Vessel Deliveries

While LPG shipping remains fundamentally demand-driven, recent fleet expansion shows growing strategic alignment with LNG shipping, particularly in the focus on larger, high-CBM vessel deliveries. Similar to LNG, capacity additions in the LPG segment are increasingly concentrated in modern, fuel-efficient vessels designed to optimise cargo intake, voyage economics, and emissions performance. This trend reflects a shared emphasis across both gas carrier segments on fleet modernisation, scale efficiencies, and operational competitiveness.

Structural Comparison with LNG Shipping

The distinction between LPG and LNG shipping remains evident, reflecting the different roles each plays within global energy and commodity markets. LNG fleet expansion is more closely linked to infrastructure development, liquefaction capacity additions, and long-term contractual arrangements, often supported by energy security considerations. LPG fleet growth, by comparison, tends to respond more directly to underlying trade flows and commercial market conditions, with investment decisions guided by demand expectations rather than fixed project timelines.

These differing structural characteristics translate into varied risk and return profiles across the gas carrier sector. LPG shipping benefits from greater operational flexibility and the ability to adjust more quickly to market signals, albeit with higher exposure to earnings volatility. LNG shipping, meanwhile, typically offers greater long-term visibility through contract coverage, alongside more limited commercial flexibility.

Freight Market

Dry Bulk

Capesize | Atlantic strength fades on softer tone

The Baltic Capesize Index (BCI) slipped to 3,620, down 2% w-o-w, with average earnings at $30,100/ day. In the Atlantic, South Brazil and West Africa to China improved early, pushing C3 into the mid- $20s/ton before higher ideas met resistance. The North Atlantic saw the sharpest swings as tightening tonnage and stronger TA demand drove midweek momentum before a quieter close. In the Pacific, regular miner activity kept support in place, with C5 repeatedly holding in the mid-$10s/ton before easing toward $10.00/ton by week end.

Panamax | Pacific tonnage rises keeping rates under pressure

The Baltic Panamax Index (BPI) fell to 1,320, down 22% w-o-w, with average earnings at $11,900/ day. In the Atlantic, trans-Atlantic and fronthaul remained under pressure as charterers pushed for lower levels and fresh cargo cover was limited, including an 82,000-dwt unit fixed from Skaw for a trip via the US Gulf to Singapore Japan at $19,500/day. In the Pacific, a long prompt list set the tone, allowing increasingly aggressive bids for early cover, while cargo replenishment remained scarce. An 83,000-dwt unit fixed from Qinhuangdao for a grains trip with redelivery China at $11,000/day, with Indonesian tenders mainly linked to smaller and older units.

Supramax | Pacific oversupply keeps rates under pressure

The Baltic Supramax Index (BSI) fell to 1,220, down 11% w-o-w, with average earnings at $15,450/ day. In the Atlantic, rates slipped as the holiday period approached and enquiry thinned, including a 63,000-dwt fixed from the United Kingdom to the Eastern Mediterranean on a scrap run at $20,750/ day. In the Pacific, limited fresh enquiry and a long tonnage list kept pressure on, with a 53,000-dwt fixed from South China on an Indonesian round voyage at $7,200/day.

Handysize | Continent and Med stays quiet as rates slip

The Baltic Handysize Index fell to 750, down 7% w-o-w, with average earnings at $13,400/day. In the Atlantic, the Continent and Mediterranean stayed subdued, including a 37,000-dwt fixed delivery Canakkale via Constanta to Tekirdag at $11,250/day. Sentiment stayed weak in the South Atlantic and US Gulf as the tonnage count continued to build. In the Pacific, the negative tone persisted with no clear improvement in demand, including a 28,000-dwt fixed delivery Singapore via Southeast Asia to Yantai at $9,000/day.

Freight Market

Tanker

VLCC | MEG correction pulls levels down

VLCC rates corrected sharply lower on the main routes. In the Atlantic, TD15 (West Africa/China) lost 10 points to WS104, while TD22 (US Gulf/China) fell to $12,5m after losing over $1.2m. In the Pacific, TD3C (MEG/China) sank by over 11 points to WS115. Early January MEG stems have been released, but January fixing was reported as limited so far.

Suezmax | West Africa firms

Suezmax strengthened in the Atlantic and Mediterranean, while MEG levels held. In the Atlantic, TD20 (Nigeria/UK Continent) rose 13 points to WS143 and TD27 (Guyana/UK Continent) firmed 10 points to WS137. In the Med, TD6 (CPC/Augusta) edged up 3 points to WS161. In the Pacific, TD23 (MEG/Med via Suez) hovered around WS105, with the MEG list described as tight and January West Africa cargoes starting to come into view.

Aframax | US Gulf strengthens as rates rise

Aframax moved sharply higher on Atlantic short haul, while Europe was steadier and the Pacific stayed weak. In the Atlantic, TD26 (EC Mexico/US Gulf) jumped over 48 points to WS250 and TD9 (Covenas/US Gulf) rose 35 points to WS234, while TD25 (US Gulf/UK Continent) rose toward WS210 before easing to WS207. In the Pacific, TD29 (Vancouver/PALP) fell another 10 points to WS214, while Europe saw TD7 (Cross-UK Continent) hold around WS157 to WS157 and TD19 (Cross-Med) ease to WS204.

LR | MEG softens as key routes ease

Clean LR eased in the MEG, while West of Suez was near unchanged. In the Atlantic, TC16 (ARA/ West Africa) moved marginally lower to WS149, while TC15 (Med/East) held around $4.3m. In the Pacific, LR2 TC1 (MEG/Japan) slipped to WS150 and LR1 TC5 (MEG/Japan) fell to WS167, with westbound MEG runs also lower on the week.

MR | UK Continent weakens as rates drop

MR remained split by basin, with Atlantic benchmarks falling again while MEG held at higher levels after a midweek push. In the Atlantic, TC2 (ARA/US Atlantic Coast) dropped to WS115 and TC14 (US Gulf/UK Continent) sat around WS167.5, with off market business reported to be holding rates from slipping further. In the Pacific, TC17 (MEG/East Africa) returned to WS249 after trading up to WS253 midweek.

Sale & Purchase

Secondhand sales Dry

This week, secondhand favored larger and ageing tonnage.

In the Capesize segment, CAPE MERLIN (206k dwt, 2005, Imabari) fetched USD 23.5 million, predominantly due to its imminent SS/DD. However, a younger candidate, GOLDEN MAGNUM (180k dwt, 2009, Daewoo) commanded a higher price of USD 28.7 million, possibly due to its installed scrubber system.

In the mini-Capsize segment, PENELOPE OLDENDORFF and PATRICIA

OLDENDORFF (115k dwt, 2010, New Century) fetched USD 16 million, both equipped with scrubbers.

In the Supramax segment, ELEEN EVA (58k dwt, 2012, Shin Kurushima) reportedly sold for 17.5 million with SS/DD freshly passed.

Sale & Purchase

Secondhand sales Tanker

This week, secondhand market reveals activity both in the dirty and clean segments for older but also for more modern vessels.

In the Suezmax segment, the Nordic Sprinter and Nordic Luna, each sold for $25 million, built 2005 and 2004 respectively by prominent shipbuilders Hyundai HI and Universal TSU .

In the Aframax segment, the STI Gallantry and STI Goal, both built in 2016 by Guangzhou Shipyard and equipped with epoxy coating and scrubbers, achieving a sale price of $52.3 million each.

In the LR1 sector, some fresh activity emerged with the Pelagic Tope (77k dwt, 2008, Dalian Shipbuilding) reported sold at $13.8 million.

In the MR segment, a notable transaction was seen for NORD SUPERIOR (50k dwt, 2015, STX Offshore & Shipbuilding) selling in the high $33 million. Additionally, OM SINGAPORE (29k dwt, 2007, Guangzhou Shipyard), was purchased by Contiocean for USD 13.75 million.

Lastly, in the Product and Chemical segment, the OM SHANGHAI (20k dwt, 2007, Fukuoka Shipbuilding) reported at USD 15 million. In the Clean Petroleum Product segment, a new transaction emerged for the NEW BL RAY (11k dwt, 2013, Zhejiang Haifeng Shipbuilding) went for USD 7.2 million.