Atlantic tightness drives strong January performance

VLGC markets delivered a strong performance through most of January, with spot earnings reaching their highest levels since late summer. Rates were primarily supported by tight tonnage availability in the Atlantic Basin, where active Middle East and US Gulf fixing reduced prompt supply.

Canal constraints continue to support tonne-miles
Persistently high Panama Canal costs remained a key structural driver, pushing more VLGCs toward longer Cape of Good Hope routings, a trend we are expecting to see more of in the coming years. These extended voyages increased tonne-mile demand and reduced effective fleet availability, providing underlying support to earnings even as arbitrage economics narrowed later in the month. While fixing activity slowed intermittently due to terminal delays and longer fixing windows, routing inefficiencies continued to support utilisation.

Structural demand growth underpins the outlook
Despite a softer tone toward month-end, medium-term fundamentals remain constructive. Expanding US LPG export capacity, continued growth in long-haul trade into Asia, and disciplined fleet growth support the VLGC segment. Downstream demand signals also remain supportive, with European LPG vehicle sales rising 10 percent in 2025, according to Automotive News Europe, alongside continued growth in long-haul trade flows and petrochemical demand. In parallel, VLAC markets benefited from structurally rising ethane and LPG trade volumes, reinforcing demand driven by industrial and petrochemical consumption rather than short-term spot volatility.

Short-term volatility does not change the trend
The late month easing in spot earnings reflected temporary reductions in cargo flow and West basin activity rather than a shift in fundamentals. Time charter rates remained broadly stable, indicating continued confidence in the medium-term outlook. Overall, January reinforced the view that LPG shipping remains supported by structural demand growth, routing inefficiencies, and a tight supply backdrop.