Soaring LNG Prices Push Asian Demand Toward a Second Straight Annual Drop

Asian demand for liquefied natural gas is poised to fall for a second consecutive year as elevated prices squeeze purchases across key markets. Analysts cited by Reuters forecast that regional LNG demand will decline by between 3% and 10% this year.

The northeastern part of Asia is expected to account for most of the contraction. Buyers in that region have reduced LNG consumption as global prices have surged following a major disruption to supplies from Qatar.

The price escalation followed a QatarEnergy force majeure on exports after Iranian strikes hit the company’s Ras Laffan gas hub. That event pushed an already critical source of energy supply into the center of the regional demand outlook.

LNG prices reached $26 per million British thermal units in the week to September 11, according to Reuters. That compares with $10.40 per million British thermal units during the final week of February, before the United States and Israel launched the first strikes on Iran.

The sharp increase has placed pressure on Asian buyers that can turn to other sources of electricity generation. Northeast Asian countries have accounted for much of the resulting demand destruction because parts of the region have access to coal and nuclear power.

“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.

Import data also points toward a pronounced slowdown. Reuters’ Clyde Russell reported earlier today that Asian LNG imports were on course to fall to 20.09 million tons this month, based on figures from Kpler.

That total would make this the weakest September for Asian LNG imports since 2018. Imports during September last year reached 22.27 million tons, showing the scale of the retreat indicated by the latest monthly estimate.

China is driving the largest decline in LNG imports among Asian buyers. The country is the world’s largest LNG importer and is highly sensitive to price fluctuations, leaving its buying patterns particularly exposed to the current surge.

“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.

The expected delay in discretionary stocking extends the impact beyond immediate import volumes. Kpler’s outlook indicates that Chinese buyers may hold back those purchases until late December or from the first quarter of 2027 onward.

India presents a contrasting picture within the broader Asian market. Demand there was expected to remain strong, supported by household gas consumption and the fertilizer sector, according to LSEG data cited by Reuters.

That divergence means the anticipated regional decline is not evenly distributed. Northeast Asia is absorbing most of the reduction, China is recording the biggest import decline, and India continues to receive support from specific areas of domestic gas demand.

The combination of soaring prices, QatarEnergy’s export force majeure and weaker purchasing from major Northeast Asian markets is pushing Asia toward another annual contraction. Current import estimates suggest the pressure is already visible in September cargo flows, with the month tracking at its lowest level since 2018.