Weaker LNG demand in China and India in recent months reflects a price shock rather than a structural decline, according to industry executives, who say consumption in the two major Asian markets could pick up again once prices return to more normal levels.
The disruption stems from the war in Iran and the closure of the Strait of Hormuz, which have curtailed LNG supply from Qatar and the United Arab Emirates. Gulf producers have found workarounds for oil shipments, including moving crude through the chokepoint and transferring cargoes to other vessels off Oman, but LNG has proved much harder to reroute because ship-to-ship transfers of liquefied gas involve significant physical and chemical constraints.
Some LNG cargoes are believed to have moved through in recent weeks, with vessels loaded in Qatar and the United Arab Emirates transferring cargoes to other ships outside the Strait of Hormuz. Even so, those limited shipments have not offset the large supply loss since March. As a result, Asian spot LNG prices last week climbed to their highest level since 2022, while renewed escalation in the Middle East has pushed back hopes for a broader recovery in flows.
Speaking at the Gastech conference in Bangkok, GAIL chairman Deepak Gupta said, as cited by Reuters, that prices had “hit through the roof,” adding that this was clearly affecting demand in India because many sectors are highly price-sensitive.
Executives from PetroChina, the largest importer in China, also said lower purchases were a direct consequence of soaring prices in the world’s biggest LNG-buying country. Luo Yizhou, CEO of PetroChina International (PCI), the trading arm of the Chinese state giant, said the current downturn was due to “temporary suppression of the demand” caused by high prices. He added that this would not destroy demand in China and that buying could rebound if prices fall back to a normal range below $10 per million British thermal units (MMBtu).
At the same time, Yaoyu Zhang, Assistant CEO & Global Head of LNG and New Energies at PCI, cautioned that Chinese demand growth may no longer be as rapid as it was before Russia's invasion of Ukraine. He said China prioritizes cost, reliability, and flexibility in securing energy molecules and is building out its energy infrastructure accordingly.
This week, the price for October delivery into northeast Asia remained above $25 per MMBtu. Cost and supply reliability have become central themes at this year’s Gastech conference, with executives pointing to strong long-term demand potential in Asia but also underscoring how sensitive buyers remain to elevated prices.
