LNG Slowdown in Asia Masks a Bigger Surge Ahead
Demand for liquefied natural gas from the biggest importing region—Asia—has remained strong this year, although it has experienced a certain softening compared to last year. Prices are to blame for the softening—and they're about to slide lower and reverse the demand trend.
Asian LNG importers bought 112.45 million tons of LNG over the first five months of the year, Reuters' Clyde Russell wrote this week, citing data from Kpler. This was down 6.2% on the first five months of 2024. and most of the decline came from China, which sunned pricy spot market LNG.
In May alone, however, LNG shipments to Asian countries inched higher than they were in April, although the total figure remained lower than the total for May last year. The reason was probably the same as the reason for the lower five-month imports: prices. LNG prices trended higher earlier this year than last mostly because of Europe. After two mild winters, Europe assumed its demand for gas—and LNG specifically—was more or less set, but it wasn't.
The winter of 2024/25 was colder than the two last ones, and demand for gas surged, leading to a corresponding surge in imports, which, in turn, pushed international spot market prices higher. At one point, the supply situation got so grave that Europe had to divert LNG cargos from Australia and Oman, not to mention its record purchases of Russian LNG, which the European Union has been trying to give up. This is about to happen again later this year, by the way. Europe, as well as Asia, will need to stock up on gas for next winter season—except perhaps China.China has been building its natural gas stocks conscientiously ever since its 2017 gas crunch, which saw parts of the country lose power and heating due to the premature switch from coal to gas without securing enough supply. Eight years on, China had comfortable levels of gas in stock and a trade beef with the U.S., so its LNG imports over the first quarter of 2025 fell to the lowest in five years. A mild winter helped as well.
The trend continued in the second quarter as well, with Chinese LNG imports seen 20% lower in April 2025 than they were in April 2024. This is dragging Asia's total lower and, for some, creating the impression that overall LNG demand in the biggest importing region is going down on a sustainable curve because of alternative energy sources. This, however, is not exactly the case, and China is the best illustration.
The world's biggest wind and solar investor, home to the biggest capacity of both by far continues to be also one of the largest gas importers in the world. China's alternative energy growth keeps breaking record—and gas imports remain substantial despite the annual drop attributable to weather patterns and solid stockpiling.
Europe is another illustration of the robustness of the international gas market. Earlier this month, the continent saw a sudden jump in gas prices because of a production outage at a Norwegian offshore platform. Europe, like China, is betting a lot on alternative energy sources. Yet despite a surge in capacity, it still, like China, remains very much dependent on gas, as shown by the price spike following the outage at the Troll field.
Meanwhile, LNG prices are about to move higher after their slide earlier in the year. At the start of May, the spot price fell to $11 per million British thermal units, but since then, it has climbed to $12.40 per mmBtu, as of the week to May 23. As Reuters' Russell points out in his column, this is probably due to supply constraints as Chevron's Wheatstone LNG plant entered maintenance and Freeport LNG in the U.S. experienced yet another outage.
Demand is about to start climbing as well. One reason is the seasonal peak in demand that comes with higher summer temperatures in the northern hemisphere. The other is, yet again, Europe and its gas storage refill drive, which occurs regularly in the middle of the year. This year, Europe will need to buy more gas than in the last two. The winter of 2024/25 depleted its stocks, and President Trump has demanded more LNG purchases to shrink the EU's trade surplus with the United States.
Currently, Europe's gas stocks are at around 47%, but this will need to rise substantially ahead of next winter. LNG purchases in Asia will pick up as well, with Trump's crusade against what he sees as trade injustice adding to demand drivers over the next few months. So, while Asia's demand for liquefied gas may be experiencing a lull, it is a temporary lull. There are simply very few alternatives that are on par with gas as a primary source of energy.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.comRead this article on OilPrice.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
14 minutes ago
- Yahoo
Trump and Putin hint at US-Russia trade revival, but business environment remains hostile
Hundreds of foreign companies left Russia after the 2022 invasion of Ukraine, including major U.S. firms like Coca-Cola, Nike, Starbucks, ExxonMobil and Ford Motor Co. But after more than three years of war, President Donald Trump has held out the prospect of restoring U.S.-Russia trade if there's ever a peace settlement. And Russian President Vladimir Putin has said foreign companies could come back under some circumstances. 'Russia wants to do largescale TRADE with the United States when this catastrophic 'bloodbath' is over, and I agree,' Trump said in a statement after a phone call with Putin. 'There is a tremendous opportunity for Russia to create massive amounts of jobs and wealth. Its potential is UNLIMITED.' The president then shifted his tone toward Putin after heavy drone and missile attacks on Kyiv, saying Putin 'has gone absolutely crazy' and threatening new sanctions. That and recent comments from Putin warning Western companies against reclaiming their former stakes seemed to reflect reality more accurately — that it's not going to be a smooth process for businesses going back into Russia. That's because Russia's business environment has massively changed since 2022. And not in ways that favor foreign companies. And with Putin escalating attacks and holding on to territory demands Ukraine likely isn't going to accept, a peace deal seems distant indeed. Here are factors that could deter U.S. companies from ever going back: Risk of losing it all Russian law classifies Ukraine's allies as 'unfriendly states' and imposes severe restrictions on businesses from more than 50 countries. Those include limits on withdrawing money and equipment as well as allowing the Russian government to take control of companies deemed important. Foreign owners' votes on boards of directors can be legally disregarded. Companies that left were required to sell their businesses for 50% or less of their assessed worth, or simply wrote them off while Kremlin-friendly business groups snapped up their assets on the cheap. Under a 2023 presidential decree the Russian government took control of Finnish energy company Fortum, German power company Unipro, France's dairy company Danone and Danish brewer Carlsberg. Even if a peace deal removed the U.S. from the list of unfriendlies, and if the massive Western sanctions restricting business in Russia were dropped, the track record of losses would remain vivid. And there's little sign any of that is going to happen. While the Russian government has talked in general about companies coming back, 'there's no specific evidence of any one company saying that they are ready to come back,' said Chris Weafer, CEO of Macro-Advisory Ltd. consultancy. 'It's all at the political narrative level.' Russia's actions and legal changes have left 'long-lasting damage' to its business environment, says Elina Ribakova, non-resident senior fellow at the Bruegel research institute in Brussels. She said a return of U.S. businesses is 'not very likely.' 'We need to strangle them' In a meeting at the Kremlin on May 26 to mark Russian Entrepreneurs Day, Putin said that Russia needed to throttle large tech firms such as Zoom and Microsoft, which had restricted their services in Russia after Moscow's invasion of Ukraine, so that domestic tech companies could thrive instead. 'We need to strangle them,' Putin said. 'After all, they are trying to strangle us: we need to reciprocate. We didn't kick anyone out; we didn't interfere with anyone. We provided the most favorable conditions possible for their work here, in our market, and they are trying to strangle us.' He reassured a representative from Vkusno-i Tochka (Tasty-period) — the Russian-owned company that took over McDonald's restaurants in the country — that Moscow would aid them if the U.S. fast food giant tried to buy back its former stores. Asked for comment, McDonald's referred to their 2022 statement that 'ownership of the business in Russia is no longer tenable.' Not much upside On top of Russia's difficult business environment, the economy is likely to stagnate due to lack of investment in sectors other than the military, economists say. 'Russia has one of the lowest projected long-term growth rates and one of the highest levels of country risk in the world,' says Heli Simola, senior economist at the Bank of Finland in a blog post. 'Only Belarus offers an equally lousy combination of growth and risk.' Most of the opportunity to make money is related to military production, and it's unlikely U.S. companies would work with the Russian military-industrial complex, said Ribakova. 'It's not clear where exactly one could plug in and expect outsize returns that would compensate for this negative investment environment.' Repurchase agreements Some companies, including Renault and Ford Motor Co., left with repurchase agreements letting them buy back their stakes years later if conditions change. But given Russia's unsteady legal environment, that's tough to count on. The Russian purchasers may try to change the terms, look for more money, or ignore the agreements, said Weafer. 'There's a lot of uncertainty as to how those buyback auctions will be enforced.' But what about the oil and gas? Multinational oil companies were among those who suffered losses leaving Russia, so it's an open question whether they would want to try again even given Russia's vast oil and gas reserves. US.. major ExxonMobil saw its stake in the Sakhalin oil project unilaterally terminated and wrote off $3.4 billion. Russia's major oil companies have less need of foreign partners than they did in the immediate post-Soviet era, though smaller oil field services might want to return given the size of Russia's oil industry. But they would have to face new requirements on establishing local presence and investment, Weafer said. Some never left According to the Kyiv School of Economics, 2,329 foreign companies are still doing business in Russia, many from China or other countries that aren't allied with Ukraine, while 1,344 are in the process of leaving and 494 have exited completely. The Yale School of Management's Chief Executive Leadership Institute lists some two dozen U.S. companies still doing business in Russia, while some 100 more have cut back by halting new investments. EU sanctions could remain even if US open U.S. sanctions are considered the toughest, because they carry the threat of being cut off from the U.S. banking and financial system. But the EU is still slapping new rounds of sanctions on Russia. Even if U.S. sanctions are dropped, EU sanctions would continue to present compliance headaches for any company that also wants to do business in Europe. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28 minutes ago
- Yahoo
US calls for Asia allies to boost defenses in face of China's ‘imminent' threat, Hegseth tells top defense forum
US Defense Secretary Pete Hegseth on Saturday delivered a dire warning to the Asia-Pacific region and the world: China's designs on Taiwan pose a threat to global peace and stability that requires 'our allies and partners do their part on defense.' 'There is no reason to sugarcoat it. The threat China poses is real. And it could be imminent,' Hegseth said in a speech to the Shangri-La Dialogue, Asia's premier defense forum, in Singapore. 'Beijing is credibly preparing potentially to use military force to alter the balance of power in the Indo-Pacific,' with People's Liberation Army (PLA) forces training daily to take military action against Taiwan, Hegseth said. He noted that Chinese leader Xi Jinping has ordered his military to be prepared by 2027 to invade Taiwan, the democratic island of 23 million people that the Chinese Communist Party claims as its sovereign territory despite having never ruled it. 'The PLA is building the military needed to do it, training for it every day and rehearsing for the real deal,' Hegseth said, delivering some of his strongest comments against China since he took office in January. He said US President Donald Trump has pledged not to let Taiwan fall to China on his watch, and he called on US allies and partners in the region to band together to stand up to Beijing, both on the Taiwan issue and other regional disputes where China aggressively pursues its agenda, such as in the South China Sea. 'China's behavior towards its neighbors and the world is a wake-up call. And an urgent one,' the US defense chief said. But he said the US cannot deter the Chinese threat alone, calling on other nations to be 'force multipliers' against Beijing. 'We ask – and indeed, we insist – that our allies and partners do their part on defense,' he said. Hegseth urged Asian countries to increase their defense spending, pointing to NATO allies who have boosted it to 5% of gross domestic product. 'So it doesn't make sense for countries in Europe to do that while key allies in Asia spend less on defense in the face of an even more formidable threat, not to mention North Korea,' he said. While Hegseth made clear that Washington does not seek conflict with China, he stressed the Trump administration would not let aggression from Beijing stand. 'We will not be pushed out of this critical region, and we will not let our allies be subordinated and intimidated,' he said. Hegseth's speech adds to heated tensions between Washington and Beijing. China has railed against America's efforts in recent years to tighten its alliances and stiffen its defense posture in Asia, while economic frictions rose to historic levels earlier this year after Trump imposed tariffs on China, sparking a tit-for-tat between the two countries that saw duties rise to more than 100% on each other's goods. The annual Shangri-La Dialogue in Singapore has in the past been a place where defense leaders from the US and China can meet on the sidelines and foster at least a minimal dialogue between the two foes. No such meeting is expected to take place this year. China announced on Thursday that it would send only a low-level delegation from its National Defense University to Shangri-La, rather than its defense minister, who has spoken at the past five forums. When the International Institute for Strategic Studies, which sponsors the event, belatedly released a speakers list for the forum on Friday afternoon, the usual 8:30 a.m. time slot for a Chinese representative to speak was scrubbed from the agenda. At a Chinese Defense Ministry press conference on Thursday, a spokesperson ducked a question on why Beijing was not sending its defense minister to the forum. China was 'open to communication at all levels between the two sides,' a ministry spokesperson said, when asked about a potential sidelines meeting with the US delegation. Hegseth's call for allied cooperation in deterring China is a carryover from the Biden administration, but the Trump administration seems more strident than its predecessor. Ahead of the Singapore conference, there was broad consensus among analysts that unlike the turmoil Trump has caused in Europe – with threats to pull back from NATO and abandon Ukraine in its fight against Russia's invasion – the US role in Asia has largely been consistent, centered on a policy to counter Chinese influence and back Taiwan. Analysts noted that US-led military exercises, especially those involving key allies Japan, Australia, the Philippines and South Korea, have continued or even been bolstered in 2025.
Yahoo
28 minutes ago
- Yahoo
O'Leary bashes Trump's ‘stupid' Harvard foreign student crackdown
Investor Kevin O'Leary seemingly bashed the Trump administration's recent crackdown on Harvard's international student population, calling the actions 'stupid' during a Friday Fox News interview. 'Harvard's taken a lot of heat for other stuff, but they shouldn't be taking heat for curating amazing cohorts,' the 'Shark Tank' star said while appearing on 'Outnumbered.' 'These kids are amazing, and we gotta keep them here.' President Trump recently upped his attacks on the Ivy League institution, suggesting a 15 percent cap be imposed on the percentage of foreign students that Harvard University and other U.S. higher education institutions can admit. Secretary of State Marco Rubio in recent days also threatened to revoke student visas for all Chinese scholars. 'And I'll tell you what, many of those students didn't go anywhere. Many of those students were troublemakers caused by the radical left lunatics in this country,' Trump said of international students while speaking to reporters Wednesday from the Oval Office. O'Leary, who teaches at Harvard as an executive fellow, shot down Trump's claims without mentioning the president directly. 'They don't want to leave America. They don't hate America,' O'Leary said of the students he's encoutered. 'They want to get a passport, stay here and start a business. I think I'm one of the lone voices pointing that out.' O'Leary continued, 'Why would we want to brightest and the smartest people on earth and kick them out of the country after we spend millions teaching them? It seems stupid to me.' Trump's actions against Harvard have been stymied recently, as a federal judge sided with Harvard in its fight against Trump's international students cap. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
