Asian LNG Demand Set for Rebound as Supply Eases
China and India's liquefied natural gas (LNG) demand is expected to rebound as global supply conditions improve and prices decline. The two countries have reduced LNG consumption due to Middle East supply disruptions, which pushed Asian spot prices to nearly $30 per million British thermal units (mmBtu).
The conflict in the Middle East has disrupted LNG exports from Qatar and the United Arab Emirates through the Strait of Hormuz, a critical shipping route that handles around one-fifth of global LNG supplies. As a result, about 36 million tonnes (mt) of LNG supply from the Middle East has been lost so far this year.
India's GAIL Chairman Deepak Gupta stated that some industries have switched away from gas during periods of elevated prices, temporarily reducing domestic demand. However, Gupta expects LNG prices to moderate as between 150 mt and 200 mt of additional global LNG supply is projected to enter the market over the next four to five years.
China's PetroChina International CEO Luo Yizhou also believes that gas-fired power generation demand will strengthen when LNG prices return to a range of around $7-$9/mmBtu. This could lead to a recovery in LNG demand for both China and India, as global supply expands and prices become more competitive.