Soaring LNG Prices Push Asian Demand Toward Second Annual Decline

Demand for liquefied natural gas in Asia is set to decline this year by between 3% and 10% on higher prices, according to analysts cited by Reuters.

This would be the second annual decline in Asian LNG demand, with the northeastern parts of the continent accounting for most of it, the publication reported. LNG prices have soared globally in the aftermath of the QatarEnergy force majeure on exports that followed Iranian strikes on its Ras Laffan gas hub.

“A lot of that demand destruction has been absorbed by Northeast Asia … they have coal, they have some nuclear availability. Depending on the country’s power mix, they were able to bring down their LNG demand,” Rystad Energy analyst Lu Ming Pang said, as quoted by Reuters.

As a result of the force majeure in Qatar, LNG prices have surged, reaching $26 per million British thermal units in the week to September 11, per Reuters. This is up from $10.40 per mmBtu in the last week of February before the United States and Israel launched the first strikes on Iran.

Earlier today, Reuters’ Clyde Russell reported that Asian imports of liquefied natural gas were set to drop to 20.09 million tons this month, making it the weakest September for LNG imports since 2018, based on data from Kpler. Last year, the September total stood at 22.27 million tons.

The biggest decline in LNG imports is coming from China, which, as the world’s largest LNG importer, is highly sensitive to price fluctuations. “Under current high prices, discretionary stocking is also going to be delayed for Chinese buyers. We think the major discretionary stocking is going to come in late December or Q1 2027 onwards,” Kpler analyst Nelson Xiong told Reuters.

Demand in India, meanwhile, was expected to remain strong, supported by the country’s household gas demand and the fertilizer sector, according to LSEG data, cited by the publication.

By Irina Slav for Oilprice.com

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