Analysts highlight that LPG shipping faces volatile rates in 2026, shaped by fleet expansion and geopolitical risks
Drewry’s LPG and LNG analysts note that 2025 has been a volatile year for LPG shipping. The combination of the US–China tariff dispute and heightened geopolitical tensions in the Middle East drove sharp rate fluctuations. “At the start, vessel supply tightened and premiums rose as some owners hesitated to enter the region. That curbed vessel availability,” said Drewry senior manager for gas shipping Aman Sud.
He was speaking at a Drewry Shipping Consultants LPG webinar reviewing market conditions, trade flows and the longer-term fleet outlook. He was joined by Drewry research analyst Nisha Manav, and Drewry research associate Pratiksha Negi in examining the interplay of supply, demand and geopolitics shaping the sector.
Mr Sud noted that despite strong earnings in early 2025, Drewry projects that very large gas carrier (VLGC) rates will fall by 19% later in the year, an improvement on the earlier forecast decline of 22%. He attributed the revision to stronger-than-expected trade, Panama Canal congestion and robust US exports supported by new terminal capacity. Looking further ahead, he said the fastest fleet expansion will occur in 2026 and 2027, when many VLGCs and very large ammonia carriers (VLACs) are due for delivery. “That will lead to weaker earnings,” he said, noting that the forecast covers the period to 2028, with projections extended to 2030.
Ms Manav described how midsize gas carriers (MGCs) face an “identity crisis” as VLGCs increasingly encroach on their traditional trades. India, a stronghold for MGC demand, has shifted towards VLGCs following infrastructure upgrades. The ammonia trade has remained stagnant, and newbuilding costs are high. Nevertheless, she said long-term prospects appear stable, supported by LPG demand in southeast Asia and growing US–Europe flows. She stressed that MGCs are expected to be the first vessels to handle green ammonia, providing them with a future role.
“Fleet growth in 2026 and 2027 will pressure earnings”
Turning to trade flows, Ms Manav said Drewry had revised its projection for 2025 global LPG trade upwards from 1.4% to 1.9%. Imports by China rose 6% year-on-year, but growth was limited by tariffs and high landing costs, constraining petrochemical demand. India’s imports fell 4% due to high prices and weaker residential consumption. By contrast, Japanese imports grew 8% on the back of petrochemical demand and restocking, while South Korea’s intake remained subdued. Rising demand in Indonesia, Thailand and Vietnam provided additional support.
