Momentum in LPG market – new ammonia landmarks

VLGC rates rose in May following the April decline

The LPG market strengthened in May, with a steady rise in VLGC spot rates. The benchmark route Ras Tanura–Chiba reached USD 52,600 per day, marking a 25% increase compared to the 2024 average, while MEG–Asia earnings rose by 24% week-on-week by mid-month.

This signifies a strong rebound after April's brief dip below USD 10,000 per day, driven by robust U.S. propane exports, limited domestic storage, and increased activity in both basins.

The upcoming operational status of the new U.S. export capacity is expected to boost freight volumes in the third quarter. Simultaneously, the temporary suspension of tariffs between the U.S. and China has encouraged eastward flows and improved market sentiment. With stable earnings also noted on the Houston–Chiba route, the fundamentals of VLGCs remain robust as summer approaches.

Ammonia trade bolsters the long-term outlook for VLACs

The ammonia sector continues to expand. Announced this month, Oman is establishing itself as a major exporter of green ammonia, targeting 5.6 million tonnes annually by 2030 and over 30 million tonnes by 2050. Projects like SalalaH2, backed by long-term purchase agreements, will boost long-distance trade to Asia and Europe, thereby increasing demand for very large ammonia carriers (VLACs).

This structural trend is bolstered by Trafigura's recent order for four medium-sized dual-fuel gas carriers, designed to operate on ammonia, with delivery expected from 2028. These vessels, powered by ammonia engines, demonstrate the growing confidence in ammonia as a marine fuel and a global commercial commodity.

Source : Clarksons, Fearnleys, Association de l'Énergie Ammoniac