Drewry expects LNG shipping to normalise further in 2025 as fleet growth continues to outpace liquefaction build-up, preventing any recovery in rates. Although demand will recuperate, erratic weather conditions, LNG prices, competition from other sources of energy and efforts towards carbon neutrality will dictate the LNG appetite, with demand varying regionally. Moreover, global LNG supply will remain tight despite the start of some new projects, keeping prices vulnerable to supply shocks while geopolitical risks remain high.Rates to roll down
We expect LNG shipping rates to soften further in 2025 as:
• 96 LNGCs are scheduled to be delivered next year, aggravating the oversupply situation;
• The additional 42 mtpa of new capacity will be insufficient to balance the fleet growth; and
• The demand outlook is mixed, varying regionally – a slight recovery is expected in Europe while Asia will remain the primary growth hub. Meanwhile, how the 2024-25 winter ends will be pivotal for Europe’s LNG demand next year.

The fleet is projected to grow 11% YoY in 2025, driven by high deliveries. We expect the scrapping of steam turbine carriers to rise next year as these vessels invariably become idle with no re-employment opportunities and act as a ‘buffer’ in the total supply, further limiting any potential growth in rates. Considerable scrapping (of about 30-40 carriers) will be required to restore the supply-demand balance and stabilise rates next year.

Some silver linings: Despite the gloomy rate outlook for 2025, higher US-Asia trade, coupled with COGH being the preferred passage for LNGCs, there could be respite for LNG shipping (a similar case seen in 2024) as we expect no resolution to the Red Sea crisis, while LNGC transits via the Panama Canal will be steady.

New supply on the horizon: The US is expected to add the largest new production volumes in 2025, with the start of key projects such as Plaquemines LNG (13.3 mtpa) and Corpus Christi LNG Phase 3 (10 mtpa). Global LNG supply will improve next year with the advent of a new exporter, Canada LNG (13 mtpa).

On the buyer side: China will remain the biggest importer in 2025 despite expected economic headwinds. Asian LNG demand will be supported by the increasing role of LNG in power generation and industries as well as easing LNG prices. However, growing competition from other alternative sources of energy (renewables and nuclear) and the rising push towards carbon neutrality could deter LNG demand, especially in Europe.

New FID wave expected in 2025-26: The pace of granting FIDs decelerated in 2024 following the US pause on LNG export permits and licenses, which led to project delays and a slowdown in supply deals compared to the last two years. Although we expect the FID pace to pick up from 2025 due to Trump’s re-election, FIDs for US projects will accelerate towards 2H25 as regulatory ease alone will be insufficient to bring back the momentum seen in 2022-23. Moreover, projects will also need to navigate other hurdles, such as financing, legal environmental and shipping/vessel requirements. Thus, the next wave of new FIDs will gradually peak towards the latter half of 2025 and in full-year 2026.

Geopolitical tensions show no sign of easing, with little prospect of any resolution to the conflict in Europe or tensions in the Middle East, likely in the near term.

Another challenging year ahead for LNG shipping – some of the key potential scenarios and their impact on LNG shipping are summarised below:

Conclusion
LNG shipping rates will be lower in 2025 than in 2024 as a result of increasing vessel supply, moderate demand growth and limited capacity addition. Weather conditions, prices, policy decisions and competition from other energy sources will be the primary factors driving the demand for LNG. The expected boost in Asian LNG demand next year will further improve US-Asia trade, with COGH being the preferred route for LNGCs. While this will act as a silver lining for LNG shipping, it still is insufficient to absorb the newly built vessels.

Source: Drewry