China’s LNG imports plummeted by 20% in H1 2025, their steepest decline since the 2022 gas crisis, and highlighting China’s growing role as a key balancing market.
Several factors contributed to China’s fading LNG appetite:
(1) Lower domestic demand: China’s gas consumption dropped by an estimated 1% in H1 2025, amid weaker macroeconomics, higher renewables and price induced gas-to-coal switching dynamics both in the industrial and power sectors;
(2) Stronger piped gas flows: Russian piped gas deliveries increased by near 25% (or almost 4 bcm) in H1 2025, with the Power of Siberia pipeline now running at its maximum contractual capacity;
(3) Higher domestic gas output: China’s domestic fields increased their output by around 6% in H1 2025, showing limited responsiveness to the prevailing weak demand fundamentals;
(4) Lower storage injections: after a relatively mild winter, China closed the heating season with storage sites almost 50% full, which might limited storage injection needs in Q2 2025.
China’s LNG buyers reduced their imports from their long-term contracts by more than 10% and resold some of those volumes to other markets both in Asia and Europe. this shows the growing trading capabilities of Chinese buyers, which are gradually transforming themselves to portfolio players.
At the same time, China’s spot LNG imports plummeted by almost 40%, with Chinese buyers practically disappearing from the spot market, due to the unfavourable price spreads between domestic benchmarks and spot LNG.
China’s lower LNG appetite was once again a blessing for Europe, which needs to refill its storage sites and hence ramp-up its LNG supplies (while piped gas imports from Russia are declining further).
What is your view? how will China’s LNG demand evolve in the second half of the year? recent heatwaves and improving industrial activity somewhat drove-up gas demand and July imports are now nearing last year’s levels… and improving supply fundamentals could trigger some further demand response.
Source: Greg Molnar
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