October 2026
The medium gas carrier (MGC) freight market strengthened during 2026, underpinned by a major reorientation of LPG trade flows. A sharp increase in US cargo availability, growing exports from Argentina and reduced loadings from the Arabian Gulf collectively increased sailing distances and tightened vessel availability. Strength in the VLGC sector provided additional support by reinforcing owner confidence and increasing the commercial attractiveness of smaller LPG parcels. However, the improvement in MGC freight rates was principally driven by the segment’s own increasingly tight supply-demand balance.
The strengthening market was clearly reflected in period rates. Poten’s average one-year time charter (TC) rate assessments for a 40,000 m3 eco MGC increased from approximately $32,700/d in January 2026 to slightly below $42,000/d in September, representing a rise of around 28%. The rate averaged around $37,000/d during January-September 2026, approximately 19% above the average of $31,000/d recorded during the corresponding period of 2025.
A similar improvement was observed for 38,000 m3 MGCs. The average TC rate for this vessel size increased from slightly below $29,000/d during the first nine months of 2025 to approximately $34,700/d in the same period of 2026.
Increased liftings from the US
The rapid expansion of US exports was the most important factor supporting MGC employment. US MGC LPG loadings reached 572 cargoes during January-September 2026, more than double the 277 cargoes recorded during the same period in 2025. Including ethane and petrochemical gases, total US MGC loadings increased from 345 to 664 cargoes.
The destination profile of US MGC exports also became more supportive of vessel demand. Total volumes carried from the US increased from approximately 6.3 MMt during January-September 2025 to nearly 8 MMt in 2026. Latin America and the Caribbean received approximately 3.2 MMt, up from 2.1 MMt in the previous year, raising the region’s share of US MGC exports from around 34% to 40%.
Shipments to other markets also increased. US shipments to West Africa onboard MGCs increased from around 840,000 t during January-September 2025 to around 1.07 MMt in 2026.
European and Mediterranean volumes remained broadly stable in absolute terms, resulting in a decline in their share of US MGC exports. These changes widened the geographic distribution of US cargoes and created a more diversified employment base for MGCs.
Elsewhere, South American supply provided another source of demand. MGC LPG loadings from Argentina increased from 21 cargoes during January-September 2025 to 33 in the corresponding period of 2026.
The increase in Atlantic cargo availability coincided with a steep reduction in Arabian Gulf loadings. MGC LPG loadings from the region declined from 191 cargoes during January-September 2025 to only 51 in 2026. Although fewer Arabian Gulf cargoes reduced regional employment, the resulting shift towards the US and other Atlantic suppliers increased voyage distances for cargoes moving to Asian markets. Longer voyages absorbed more vessel days and reduced the effective availability of the MGC fleet. Longer fixing windows and stronger period-charter activity also helped absorb newbuilding deliveries that might otherwise have weighed on freight rates.
Support from the VLGC Market
Strength in the Very Large Gas Carrier (VLGC) market provided additional support to MGC freight rates. Robust US LPG exports, longer sailing distances and limited prompt vessel availability drove VLGC earnings to record high levels. An increasing number of VLGCs loading in the US Gulf and the East Coast were reported transiting via the Cape of Good Hope for discharge in Asia due mainly to delays, congestion and a reduced number of allotted slots for transit through the new locks of Panama Canal, which also led to astronomically high transit auction fees. Several shipowners preferred to ballast via the Cape for US Gulf or East Coast loadings to avoid high auction fees. In a few instances, it was observed that a neopanamax VLGC took a cargo from a Panamax VLGC via STS off Balboa to avoid a Panama Canal transit.
The assessed one-year VLGC time-charter rate averaged approximately $46,200/d during January-September 2026, around 13% higher than in the corresponding period of 2025. By September, the rate had reached approximately $57,600/d, an increase of 46% from January and 39% y-o-y. Spot-market strength was even more pronounced. Baltic VLGC time-charter equivalent earnings rose sharply during the second and third quarters as high US export volumes and longer voyages tightened available tonnage.
Higher VLGC freight costs improved the relative economics of smaller parcels in markets capable of receiving MGC cargoes. Limited VLGC availability also increased competition for alternative vessel capacity, while exceptionally strong earnings in the larger segment strengthened owner sentiment across the gas-carrier market.
This excerpt is taken from Poten’s LPG in World Markets. Complete the form below to learn more or request a trial.