Asian LNG Demand Falls as Prices Hit $26 per mmBtu
Northeast Asian LNG imports are projected to drop 3-10% this year as spot prices double to $26/mmBtu, while India maintains procurement volumes.
Asian LNG demand is expected to contract by 3% to 10% from 2025 levels, driven primarily by a sharp decline in Northeast Asia. Spot prices have more than doubled to approximately $26 per million British thermal units, the highest level since December 2022, following supply disruptions in the Gulf.
The price spike stems from damage to Qatar’s export infrastructure, which knocked out 17% of its capacity and triggered a force majeure declaration. While China, Japan, and South Korea are reducing imports, India and Bangladesh continue to secure spot cargoes despite the elevated costs.
Northeast Asia cuts import volumes
China faces the most significant reduction, with LNG demand expected to fall by 6.1 million tonnes year-on-year. High fuel costs have forced energy-intensive sectors such as ceramics, methanol, and glass to curtail output or shut plants entirely. Additionally, increased domestic gas production and pipeline imports have further reduced the need for seaborne LNG.
Japan and South Korea have also seen lower gas demand, partly due to cooler temperatures reducing the need for power generation. This decline contrasts with South Asian markets, where utility requirements remain rigid despite the price pressure.
India maintains resilient gas procurement
India’s demand remains supported by city gas distribution and fertilizer sectors, which account for roughly 70% of total imports. GAIL and PetroChina have deployed trading teams to source alternative cargoes to replace Qatari and Emirati supplies, restoring consumption to 90-95% of previous levels.
Bangladesh continues to buy spot LNG for baseload power generation. While price-sensitive industries in India have switched to other fuels, the core utility demand persists, creating a bifurcated market within Asia.
Price outlook remains elevated
Analysts expect Asian LNG demand to recover to around 280 million tonnes in 2027, contingent on Qatar resuming exports through the Strait of Hormuz. However, prices are forecast to remain above pre-conflict levels, with Kpler predicting an average of $19.30/mmBtu this year and $14.90/mmBtu next year.
Wood Mackenzie notes that even if Gulf shipments resume, European inventory replenishment needs will keep prices elevated. This dynamic creates a competitive landscape where Asian buyers must contend with sustained high costs for the foreseeable future, as cited by GN auto stocks/energy-stocks: natural gas demand.
