The VLGC market in 2025 remained highly volatile, with occasional rate spikes overshadowed by weak fundamentals. Vessel oversupply and fragile demand, along with factors such as US loading disruptions, fluctuating arbitrage, and tariff uncertainties, weakened TC rates by 22% YoY in 2025. Rates revived in 3Q25 on the back of robust supply and strong Asian demand, yet volatility persisted amid trade policy risks, weak petchem margins, and USTR-driven vessel repositioning, reinforcing the overall downward trend.
Muted start to 2025: Weather-driven trade disruptions and onset of trade uncertainties
Disruptions to US loadings: The first quarter showcased high volatility for VLGCs as the market endured a series of disruptions and uncertainties. In January 2025, adverse weather conditions (a cold snap followed by fog), pilotage delays and terminal congestion significantly impacted US vessel loadings and the LPG market.
Several terminals reported delayed loadings and restricted berthing availability. Over a dozen VLGC loadings were postponed, and some vessels faced delays of up to 5–7 days. The delays led to a spike in the Baltic Houston-Chiba LPG Index by 15-20%, constraining spot chartering activity. Meanwhile, a surge in US LPG prices due to higher domestic demand shut the US–Asia arbitrage, compelling Asian buyers to shift to the Middle East for prompt cargos.
However, the commissioning of new export capacity in mid-2025, notably Energy Transfer’s Nederland terminal, combined with a milder hurricane season, a key factor typically disrupting US LPG flows between July and October, helped sustain US LPG export flows through 2H25, maintaining 6% YoY growth in 2025.
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