Flex LNG Ltd.

The majority of the LNG carrier fleet is contracted on long term contracts that link specific exporters to specific importers. This contract structure means that a large part of the LNG shipping business is of a more industrial nature than many other shipping businesses. However, there is also a part of the LNG carrier fleet that is constructed without contract coverage at the time of ordering. These LNG carriers will typically either serve short-term spot trading or fixed on long term contracts.

The LNG shipping market weakened in 2024, culminating in what shipbrokers described as the weakest winter spot market on record during the 2024/2025 winter period. Spot rates averaged approximately $54,000 per day for the year, down from around $125,000 per day in 2023, reflecting a growing imbalance between vessel supply and LNG trade growth. The delivery of approximately 60 LNG carriers, combined with limited growth in LNG volumes and minimal floating storage opportunities, resulted in a sustained oversupply of tonnage. Despite longer voyage distances due to continued avoidance of the Suez and Panama canals and a cold start to winter in Europe, the market failed to experience a meaningful seasonal uplift. Spot fixture activity increased significantly year-on-year as charterers benefited from extensive vessel availability and widespread subletting, while term activity declined, reinforcing the structural softness in rates. No meaningful rebalancing in favor of shipowners emerged by year-end, and oversupply conditions persisted into 2025.

High tonnage availability continued to weigh on the LNG shipping market through most of 2025, resulting in historically low spot rates during the first half of the year and prolonged idle periods, particularly among steam turbine and tri-fuel diesel electric vessels. Average spot rates declined to approximately $37,000 per day for the full year, compared with around $54,000 per day in 2024, despite increased fixture activity driven by higher LNG export volumes and elevated relet availability. In the second half of the year, stronger Atlantic Basin LNG production, led by the United States, together with incremental Nigerian and Algerian supply and congestion around Egypt and the Suez Canal, temporarily tightened prompt vessel availability. This supported a short-lived rate recovery in the fourth quarter, with two-stroke spot rates briefly reaching elevated levels before easing again as relet volumes returned to the market. In the term segment, chartering activity increasingly focused on long-dated employment linked to newbuild deliveries scheduled in 2028 to 2029, with several vessels secured on multi-year charters, while speculative ordering also increased toward year-end. Overall, 2025 was characterized by continued structural oversupply, episodic tightness driven by Atlantic Basin dynamics, and a clear bifurcation between spot market volatility and longer-term positioning by market participants.