LNG market softens, LPGs rise again

According to Hellenic Shipping News, the global LNG shipping market softened this week despite an increase in spot and long-term requirements. While activity picked up compared to recent weeks, vessel availability continues to outweigh cargo demand, putting pressure on freight rates across both basins.

LNG Market Softens

The Baltic Exchange reports a decline in BLNG1 Australia–Japan route rates by $2,300 week-on-week to settle at $34,600/day. The Pacific market remained relatively balanced but faced the same challenge of excess tonnage. On the BLNG2 US Gulf–Continent route, rates fell by $4,900 to close at $21,200/day. Similarly, the BLNG3 US Gulf–Japan route declined $4,200 week-on-week to settle at $52,100/day.

Further, in the time charter market, six-month rates fell by $1,600 to $46,300/day, while one-year terms declined by $334 to $52,033/day. The three-year period eased by $350 to $69,950/day.

LPG Market Strengthens

The LPG market strengthened this week, supported by a tight tonnage list and several outstanding cargoes according to Hellenic Shipping News. On the BLPG1 Ras Tanura–Chiba route, rates settled at $265.00/tonne with a corresponding TCE of $258,182/day. The BLPG2 Houston–Flushing route increased by $18.00 over the course of the week to close at $190.83/tonne, while TCE rose by $25,114 to $227,905/day.

The BLPG3 Houston–Chiba route gained $22.00 to settle at $344.71/tonne, with TCE increasing by $15,331 to $214,030/day. This route posted steady gains supported by improving Eastbound economics and limited vessel availability.

New Ship Orders

The surge in fuel demand from international ship orders has driven a 10.3% increase to 64.2 million tons with LNG vessels gaining significant market share, as reported by SeaNews Türkiye. Despite this growth in demand and orders, the share of LNG-fueled vessels has increased. According to analysis published by Ship & Bunker based on data from Clarksons Research, the number of ships in the global order book rose by approximately 650 since July, reaching a total of 7,305.

Methane Slip Concerns

The LNG boom faces a methane problem as reported by gCaptain. The fuel carries a weakness that the industry has spent years talking around, with not all of the methane entering the cylinder being burned. Some passes straight through to the funnel, making methane a far more potent greenhouse gas than CO2 over any meaningful timescale.

Since 1 January 2026, the EU Emissions Trading System (ETS) has covered methane and nitrous oxide from ships. The same date brought the end of the phase-in period with operators now surrendering allowances for 100% of their verified in-scope emissions. FuelEU Maritime already counts methane slip in its greenhouse gas intensity calculation using a default value of 3.1% of fuel consumed, but this number is now being scrutinized as the best available independent evidence suggests that it may be double or even higher.

What This Means for Operators

The practical consequences for operators are significant. The methane slip issue means that companies must now factor in a much larger environmental impact from their LNG-fueled vessels, which could affect their carbon footprint calculations and compliance with new emissions regulations. In the short term, this may lead to higher operational costs as methane mitigation technologies become more prevalent. In the long run, operators may need to reconsider their fuel choices or invest in advanced technology to reduce slip rates.