Megan Kennedy sees VLGC Rates Remain a Bright Spot in Shipping So Far This Year

In recent months, VLGC rates witnessed sustained highs, which were largely unpredicted by many forecasters. VLGC rates for conventional vessels are currently around $66,000 per day – their highest level since May 2024, which was when transit restrictions at the Panama Canal had just begun to ease following intense drought that limited the number of vessel crossings on the key US-Asia route.

Unlike other market pundits, we called for VLGC rates to increase throughout this year early on. In our last quarterly report, we said rates (for conventional VLGCs) would rise from an average $31,000 per day in 2025 Q1 to $63,500 per day by Q4, and we expected 2025 second-half rates to average $55,000 per day.

Earlier this year Forward Curve rates, on the other hand, predicted VLGC spot rates would average around $35,000 per day in the second half of 2025. This has now increased to an expected average of over $50,000 per day – in line with our original expectations.

It seems, however, that the rate increase we anticipated has come earlier than even we called for. We see stronger-than-expected US LPG exports as a key factor in supporting rates so far this year; year-to-date US exports are up by more than 5% in 2025 compared to the same period of 2024 (in line with our forecast). US LPG exports are poised to grow even further in the back half of this year with the introduction of new LPG export capacity coming on stream between now and the end of 2025. This should help support VLGC spot rates, especially those on the US-Asia route.

Another contributing factor to high VLGC rates this year is slower fleet growth. 2025 is poised to see average VLGC fleet growth of less than 3% – a substantial slowdown relative to the last two years, when VLGC fleet growth reached 9-10% per year.

Ironically, the tariff turmoil also contributed to bolstering VLGC rates. While Chinese LPG imports from the US dipped in early April after the US administration imposed new tariffs against China, they bounced back strongly in the second half of the month and gained more ground in May after the two countries announced a trade truce.

For further details on this and other shipping markets please get in touch with us at one of our offices – we look forward to hearing from you.