Global Shortage of Clean Ammonia Could Drive VLACs in LPG Trade

The global shortage of clean ammonia could lead owners to use Very Large Ammonia Carriers (VLACs) in the LPG trade, potentially causing oversupply and lowering charter rates. Ammonia is vital to the global economy, especially in agriculture for fertilizers, and is mainly shipped via Medium Gas Carriers (MGCs). Most ammonia is produced through the Haber-Bosch process, with “Grey” ammonia generating a significant portion of global carbon dioxide emissions.

Despite steady demand, the ammonia trade has weakened due to plentiful domestic supply, fertiliser production capacity, and rising natural gas prices. Asia, particularly China and India, accounts for a large portion of global demand, with consumption increasing over the years. The future of ammonia transportation lies in large parcel long-haul trades, with specialized VLACs becoming increasingly popular, supported by investments in clean ammonia projects.

Clean ammonia, including Blue and Green ammonia, offers a low carbon alternative to grey ammonia. It is expected to drive market growth by meeting industry decarbonization goals. VLACs and ammonia-capable vessels are expected to play a significant role in the future of ammonia transportation, with a shift towards larger vessels in the LPG trade. However, concerns remain about the availability of clean ammonia for trade when VLACs are delivered, potentially impacting charter rates in the LPG market.

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