According to Drewry, the LPG shipping industry has been navigating challenges such as an oversupplied market and sluggish growth in LPG and olefin trades. However, new ship orders in 2024 have maintained strong momentum, driven largely by interest in ammonia transport as a green fuel and the increasing demand for dual-fuel vessels to meet stricter environmental regulations.
Ammonia Demand Driving New Orders
One of the primary drivers of new ship orders is the growing interest in ammonia as a clean fuel. While ammonia volumes are currently low, over 200 projects are in the pipeline, with clean ammonia trade expected to reach 8-10 million tonnes by 2029. This has fueled a significant surge in orders for Very Large Ammonia Carriers (VLACs), with 34 VLACs ordered in 2024 alone. Despite high prices, shipowners are investing in ammonia carriers to meet decarbonization goals.
Medium Gas Carriers Gaining Popularity
Medium Gas Carriers (MGCs) are seeing a rise in orders, with a record 32 vessels ordered in 2024. These vessels offer versatility, as they can transport LPG, ammonia, and ethane, making them attractive to shipowners. Dual-fuel propulsion is becoming the norm, with 83% of the MGC orderbook equipped with dual-fuel engines. MGCs are expected to be key players in the clean ammonia trade until larger volumes materialize by the end of the decade.
Emerging Segments and Future Outlook
Other segments, such as Large Gas Carriers (LGCs), have also seen rare new orders after a decade of inactivity. Additionally, Ultra-Large Ethane Carriers (ULECs) have gained traction, with 60 vessels now on order due to the increasing demand for ethane as a feedstock for petrochemical plants. Despite concerns of oversupply, the push for cleaner fuels and new technologies will likely keep new ordering activity robust through 2025.
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Source: Drewry
