LNG Market Downturn Forces Owners To Scrap Aging Fleet; 60 Carriers Remain Idle

The LNG shipping market is facing a downturn, with owners scrapping older vessels at a faster pace while nearly 60 LNG carriers remain idle, according to data from Clarksons Research.

In the past week alone, four steam-powered LNG carriers were sold for demolition by two South Korean owners. The ships include Hyundai Aquapia and Hyundai Technopia, both built around the year 2000 with a capacity of 135,000 cubic meters. These were sold together for about $565 per light displacement ton, bringing in roughly $19.2 million each.

Another two LNG carriers, HL Ras Laffan and HL Sur, also built in 2000, were sold by Hyundai LNG Shipping under similar terms. All four ships are now being sent to South Asia for dismantling.

This brings the total to seven LNG ships scrapped so far in 2025, with a combined capacity of about 830,000 cubic meters, almost equal to the full-year total of eight vessels (960,000 cubic meters) scrapped in 2024.

Experts say more ships are being scrapped because newer fuel rules and pollution limits are getting stricter. Older LNG ships, especially those with steam turbine propulsion, are no longer able to compete with modern vessels, such as tri-fuel diesel-electric (TFDE) and two-stroke LNG carriers.

The difference in earnings is clear: TFDE ships make about $15,000 a day, while newer two-stroke ships earn around $30,000 a day. Both are earning less than what’s needed to make a profit, but aging vessels are suffering the most.

As demand stays low, owners are finding it hard to use older ships. Many are quietly trying to sell them, but there are only few buyers.

On a recent Q1 earnings call, Flex LNG’s interim CEO Marius Foss said more steamships and TFDE vessels are being moved into lay-up. He noted that bringing them back to trading condition will be costly and time-consuming.

Foss explained that many vessels with poor fuel economy and outdated systems are simply being “parked.” According to him, several are being quietly listed for sale, but the chances of a successful deal are very low, making scrapping the more realistic option.

He also pointed out that while the LNG carrier orderbook is large, with over 300 new vessels expected over the next five to six years, about 90% of those are already tied to long-term charters, mostly linked to QatarEnergy projects.

Some of these deliveries could even slip from 2025 into 2026, Foss said, but the long-term outlook remains strong, especially with new U.S. LNG export projects being approved. He added that Flex LNG expects to benefit from this growth phase.

Still, the current market remains weak. Foss noted that 2025 has seen a record number of fixtures for modern two-stroke LNG ships, though at low rates. Charterers are in “no rush,” and the market remains “in the doldrums.”

He shared that Flex plans to seek a charter for its 173,400-cbm vessel Flex Artemis (built 2020), which will redeliver after drydock later this year. Early signs suggest interest may pick up in late 2025 or early 2026.

Meanwhile, Flex CFO Knut Traaholt revealed that the company has applied to delist from the Oslo Stock Exchange, with a decision expected within this quarter. If approved, the last trading day would likely be in the second half of 2025.

Reference: indiaseatradenews

Source: Maritime Shipping News