VLGC owners have seen spot rates fall more than $80,000 per day over the last month as the free tonnage list grows.
The Baltic Exchange's VLGC index finished on Wednesday at $45 per tonne, or $28,107 per day — down 10% from Tuesday and 73% from this time in January.
Rates were $110,000 per day in the first week of 2021.
Norwegian investment bank Fearnley Securities reported more activity in both Asia and the Atlantic Basin so far in February.
"However, there seems to be more downside than what we initially thought, with the availability lists swelling further versus outstanding shipping requirements," the company said.
Brokers have reported no uncovered cargoes for the rest of February.
"The Western market has for some time struggled to find a floor in terms of fixed rates and most deals concluded at Baltic average rates," Fearnley analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart said.
March cancellations
"We have also seen a few March US Gulf cancellations, but the willingness to conclude freight at fixed levels seems to have returned to some extent."
Clarksons Platou Securities assesses spot rates at $29,600 per day.
Asian propane prices have fallen, killing off previously strong arbitrage opportunities for the shipping of US propane east, analysts Frode Morkedal and Omar Nokta said.
"On the positive side, propane is now at parity with naphtha, after having been $150 per tonne more expensive in January, which could act as a support through fuel switching," they said.
Fearnley said US exports have dropped due to a pull from the domestic petrochemicals sector as margins remain strong.
Cold front for owners?
There is also seasonal heating demand as the US experiences another cold front.
The VLGC forward freight agreement (FFA) market was more upbeat on Wednesday, with March contracts trading up from $39 per tonne to $44 per tonne, or the equivalent of $25,000 per day.
Cleaves Securities saw some increased activity from the US Gulf last week, as fixing activity shifted to March, but demand is still low.
Amid the spot market slump, period charter rates for VLGCs remain significantly higher.
Shipbrokers said LPG carrier owner AW Shipping has fixed the 85,000-cbm Gas Aquarius (built 2018) for a year from Hong Kong-listed CSSC (Hong Kong) Shipping.
Brokers believe that the vessel is fetching around $50,000 per day under the charter.
AW is a joint venture of Adnoc Logistics & Services and Chinese polyurethane producer Wanhua Chemical Group.
The chartered ship adds to five VLGCs ordered at China's Jiangnan Shipyard for a reported $73m per ship. They are set for delivery in 2022 and 2023. AW's newbuilding quintet will transport LPG from Abu Dhabi to China.
Three years ago, Adnoc and Wanhua signed a shipping joint venture agreement building on a 10-year LPG supply contract worth up to $12bn.
In another period deal, IndianOil Co has chartered US-listed Dorian LPG's 80,000-cbm Captain Nicholas ML (built 2008) for 12 months at a similar rate. This means that the vessel is set to earn $18m during the charter period.
