Asia's LNG Demand Hits Eight-Year Low as Europe Sees Surging Imports

Asia's imports of liquefied natural gas (LNG) are expected to be the weakest in eight years due to high spot prices. The top-importing continent is forecast to receive 20.09 million metric tons of LNG in September, down from 22.27 million tons last year and a drop from August's 22.25 million tons.

The slump in Asian demand has led to a surplus of LNG cargoes, which are being redirected to Europe. European natural gas inventories are below the five-year average, and the continent is drawing more LNG imports. Kpler estimates that September arrivals will rise to 7.98 million tons, the most since May.

The ongoing conflict over shipping in the Strait of Hormuz has contributed to the tight market. Qatar's shipments have crumbled, with just 70,000 tons exiting the strait in August, down from an average of 6.51 million tons before the war. Spot prices have soared to 45-month highs, reaching $26 per million British thermal units (mmBtu) for delivery to North Asia.

China, which is on track to lose its title as the world's largest LNG buyer to Japan this year, is continuing to cut back on imports. September arrivals are forecast to drop to 4.32 million tons, down from 5.20 million in August and 5.32 million last year.