Spot prices for liquefied natural gas (LNG) in Asia have drifted lower despite solid demand in the top-consuming region and record imports by Europe.
Throw in tensions in the Middle East and the threat to shipments from Qatar, the second-biggest exporter behind the United States, and the relaxed spot price seems incongruous.
Part of the disconnect is explained by robust growth in supply, especially from the United States, and also by muted demand for spot cargoes from China, the world’s biggest LNG buyer.
The Asian spot price slipped to $10.60 per million British thermal units (mmBtu) in the week ended February 20, down from $10.65 previously, and also down 8.6% from the high so far this year of $11.60, reached in the week to January 30.
The current spot price is for April delivery cargoes, and therefore reflects the softer demand expected in the shoulder season between the northern hemisphere winter and summer peaks.
However, the high so far this winter of $11.66 per mmBtu in late November and the relatively narrow range for the spot Asian price since then shows that demand has been modest.
The peak price for the current winter was also 28% below the high from the previous season of $16.10 per mmBtu in February 2025.
Asia’s LNG imports have been largely steady, with commodity analysts Kpler tracking arrivals of 21.12 million metric tons in February, up marginally from the 20.75 million in February last year.
However, China’s imports dropped to a forecast 3.38 million tons in February, the lowest monthly total in Kpler data since April 2018 and down from 4.47 million in February last year.
Effectively China has been shunning spot cargoes with the bulk of imports being delivered under long-term contracts.
This is partly because of the mild winter across much of China reducing LNG demand, but also because spot prices above $10 per mmBtu erode the competitiveness of the super-chilled fuel against pipeline and domestic natural gas.
EUROPE SURGE
The absence of China in spot LNG markets has allowed Europe to increase imports to meet winter demand, with Kpler forecasting record arrivals of 14.20 million tons in February.
This will eclipse the previous all-time high of 13.67 million tons from January this year and is also 22% higher than the 11.63 million from February 2025.
The United States is supplying the bulk of Europe’s LNG, with Kpler data showing imports of 8.05 million tons in February, or about 57% of the total.
U.S. LNG has largely replaced Russian pipeline natural gas, which has been cut back since Russia’s invasion of Ukraine four years ago.
However, Russian LNG is still arriving in Europe, with Kpler tracking imports of 1.6 million tons in February, down slightly from the 1.68 million in January, but still enough to make Russia the continent’s second-biggest supplier.
It’s likely that Europe’s strong demand for LNG will continue as the continent will need to refill depleted gas inventories, which are currently at 32% full, well below the five-year average of 49% for this time of year.
But rising U.S. supply is likely to be able to meet Europe’s demand, with Kpler estimating that U.S. exports will reach 11.19 million tons in March, which would be the second-highest on record behind December’s 11.22 million.
U.S. LNG exports in March 2025 were 8.92 million tons, meaning they are in line to jump by 26% in March this year, underlining the scale of the increase in shipments.
The increase in U.S. exports is likely enough to maintain the current equilibrium in global LNG markets, where strong demand in Europe and steady imports in Asia are offset by sufficient supply growth.
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The views expressed here are those of the author, a columnist for Reuters.
(Editing by Michael Perry)