Asia's LNG Demand Plummets as India Holds Firm at $26 Prices

Liquefied natural gas (LNG) prices have surged to around $26 per million British thermal units (mmBtu), their highest level since December 2022, due to disruptions in Gulf supplies and a conflict involving the US, Israel, and Iran.

The price shock is weighing heavily on Northeast Asia, with China's LNG demand expected to fall by 6.1 million tonnes year-on-year, according to Kpler data cited by Reuters. Japanese and South Korean gas demand has also decreased due to lower temperatures reducing power generation needs.

However, India has shown resilience in its LNG market, with demand remaining predominantly supported by the city gas distribution and fertilizer sectors, which collectively account for approximately 70% of the country's total LNG imports. GAIL Chairman Deepak Gupta stated that high prices were 'definitely impacting' demand in India, but there was still price-sensitive demand.

The outlook for 2027 is uncertain, with Asian LNG demand expected to recover as supply conditions improve and new LNG reaches the market. However, prices are forecasted to remain above pre-conflict levels, averaging around $19.30/mmBtu this year and $14.90/mmBtu in 2027.