Asia Backs Away as Europe Becomes the LNG Price-Setter

• Asian LNG imports are set to decline for the first time since 2022, as high spot prices push buyers toward cheaper alternatives such as coal.
• Europe is surging toward another record year of LNG imports, driven by weak gas storage levels and a heavy reliance on U.S. LNG.
• A new global LNG dynamic is emerging, with Europe becoming increasingly dependent on expensive U.S. cargoes while Asia maintains flexibility

Asian imports of liquefied natural gas are set for a decline this year as prices prove too high for some importing nations, forcing them to look for alternatives, while others boost domestic supply. European imports, on the other hand, are headed for another record year as flows shift.

Imports of LNG in Asia this year are on course to reach 276 million tons in total, after a strong November, at 22.99 million tons and an even stronger estimated December, when imports could reach 26.86 million tons. All this is according to data from Kpler cited by Reuters energy columnist Clyde Russell. The 2025 total, while quite robust, would be a decline on 2024, when Asia’s LNG imports hit 287.8 million tons. It would also be the first annual decline in LNG imports since 2022.

Europe, meanwhile, is buying ever more liquefied gas, mostly from the United States. Earlier figures from Kpler showed LNG flows into Europe averaged over 10 million tons annually over the first ten months of the year, with the total for the period at 101.38 million tons. Since then, flows have strengthened as the heating season begins. Some expect November imports to hit a record and remain high—because Europe is behind on its gas storage fill targets for the season.

Kpler said earlier this month the United States was set to book a 40% annual increase in its LNG exports thanks to Europe’s strong demand ahead of—and during—winter. But Europe’s storage sites are still well below filling targets, with the EU total at just 75%, versus a target of 90%. Germany, the continent’s largest importer of liquefied gas, is doing even worse, with storage capacity only filled at 66.74% as withdrawals continue to exceed injection rates considerably.

This means Europe will continue to drive prices on the global NG spot market. This, in turn, means Asian importers will continue to look for cheaper alternatives—or double down on domestic supply if they have it. China is the obvious case in point here. Until last year, the largest LNG importer in the world, China, is now focusing on pipeline flows from Russia and boosting domestic natural gas production. This leaves more LNG for other Asian importers, but again, price has become a deterrent.

Reuters’ Russell reported in his column this week that LNG prices for delivery to North Asia fell last week to $10.90 per million British thermal units, from $11.66 per mmBtu a week earlier. Still, prices have not fallen below $10 per mmBtu since April 2024, Russell noted, which prices out many Asian importers—even those that promised to buy more U.S. energy commodities as part of their trade deals with President Donald Trump.

Europe, meanwhile, does not really have a choice. While Asian countries could ramp up their coal power—and heating—generation, Europe has sworn off coal, so it must keep importing gas whether it likes the price or not. There are plenty of signs it does not really like the price, if we’re talking about consumers, especially industrial consumers. The latest PMI reading for the eurozone revealed a contraction, at 49.6, with job losses accelerating in November. The corporate sector in the EU has been warning about the devastating effect of high energy prices on economic growth for years now, but cheap energy is not an option for the authors of 19 sanction packages for Russia, former top cheap gas supplier to Europe, as they work on the 20th package.

So, Asia is betting more on alternatives to LNG and domestic gas supply while Europe is guzzling U.S. LNG. This year, Kpler expects Europe’s total LNG imports to be 123.99 million tons. This would be close to the record-breaking import rates for 2022 and 2023, when Europe took in 124.6 million tons. Last month, Europe imported 11.89 million tons of liquefied gas, pushing U.S. LNG exports up by an estimated 40% on the year.

The new picture emerging on the global LNG market is one where Europe and the U.S. become increasingly interdependent in the liquefied gas trade. For reference, U.S. LNG flows to Asia are much slimmer: the November total, per Kpler, stands at 1.43 million tons. That compares with 6.90 million tons sent to Europe.

While Europe becomes almost exclusively dependent on U.S. LNG and U.S. LNG exporters focus on the European market as their biggest growth driver, Asia remains a lot more flexible thanks to its more moderate stance on climate change and emission reduction, and the prioritization of energy security over emission cuts.

Most LNG market forecasts predict a price drop after new LNG export capacity comes online, specifically in the United States. What few mention is that the operators of that new capacity will need to make a profit, just like the operators of already existing terminals. This will necessarily put a floor under LNG prices. The question is how long Europe will be able to keep buying expensive LNG before reprioritizing, and what happens to all that LNG capacity afterwards.

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