BW LPG (BWLP) said Tuesday that fewer Panamax Very Large Gas Carriers-than-expected moved from the Middle East to the US, which reflected expectations of a short-lived conflict and constraints related to US trading requirements.
Instead, spot freight rates are up sharply due to tightened vessel availability in the US Gulf.
The market gained further support from congestion and higher transit fees for passage through the Panama Canal, prompting more VLGCs to take a longer route around the Cape of Good Hope to Asia, BW LPG said.
LPG exports from the US on VLGCs rose by 5.9% in Q1 versus a year prior and demand for US LPG intensified moving into Q2, with new loading terminals offering increased export capacity.
LPG exports from the Middle East fell 22% in Q1 from a year prior, due to the blockade of the Strait of Hormuz, the company said.
A drop in Chinese imports caused Far East LPG imports on VGLCs to fall by 8% in Q1 versus Q1 2025, as the country used more of its own inventory.
Chinese LPG inventory is now at its lowest in more than three years, which signals some pent-up demand that could intensify by the end of the Iran war.
The company signed eight new Panamax VLGCs during Q1, with deliveries over 2029 and 2030 and a total purchase value of $940 million.
The company concluded three and five year charter agreements in the low $40,000s per day for two ships, while a one-year time charter for another vessel was concluded in the high $60,000s with delivery in August.
For 2026, the company has secured 39% of fleet capacity on fixed-rate time charters at $44,800 per day, it said.