Asian LNG Buyers Retreat as JKM Exceeds Year-End Forecasts, Executives Bet on Rebound
China's August imports fell 18% year-on-year as JKM spot climbed past Morgan Stanley's peak forecast, putting industry expectations of a demand recovery squarely on price normalization.
Asian LNG spot prices sat at $27.76 per million British thermal units on Wednesday (2026-09-16), already above the $25 per MMBtu that Morgan Stanley forecast in June (2026-06-09) as a ceiling for the full second half of 2026 — and the region's biggest buyer has responded by cutting orders, not expanding them.3
Vessel-tracking data compiled by Bloomberg showed on Monday (2026-08-31) that China's LNG imports were on course to fall 18%, to roughly 5.2 million tons in August per Kpler's estimates, ending three straight months of year-on-year growth. Price-sensitive industrial consumers drove the pullback, Bloomberg reported.8
Industry executives, as reported by Sohu, argue the retreat is temporary: when prices ease, consumption across Asia's major import markets will recover. The claim has precedent. But the pace at which demand softened once JKM pushed through Morgan Stanley's own bullish scenario suggests price elasticity in Asia's industrial sector is sharper than the industry had priced in.8,3
The demand swings this year have been stark. China imported just 3.5 million tons in March (2026), down 30% year-on-year per Kpler data, pulling overall Asian imports down 4.3% to 21.12 million tons that month, the lowest in seven years per Gas Exporting Countries Forum data. The recovery came quickly. By May (2026), China was back to 4.9 million tons per Bloomberg shipping data, and the 30-day moving average for Chinese LNG deliveries climbed to 178,000 tons per day by early June (2026), the highest since early February, Bloomberg estimated.1,3
August reversed that momentum. The 18% year-on-year slump pulled estimated imports back to roughly May volumes while prices ran well above spring levels. The consumption floor is price-contingent.8
Shell's annual LNG outlook, published in late June (2026-06-30), offered the long-horizon version of the executive rebound thesis. The company projected global LNG demand rising around 65% by 2050, driven primarily by Asia as data centres expand electricity consumption and countries shift from coal. Shell estimated Asia would need roughly 300 million tons of LNG per year by 2050 as domestic production in emerging markets declines, against 422 million metric tons traded globally in 2025.4,5
Yet Shell also flagged near-term constraints. Shipping disruptions through the Strait of Hormuz, through which around 80% of Persian Gulf LNG flows to Asian buyers, could keep global LNG trade flat in 2026 if restrictions persist, the company said, with growth pushed into 2027 when new supply arrives.4,1
High prices are already redirecting some demand. Analysts expect elevated JKM levels to curb South Asian buying, with buyers weighing coal and domestic gas as substitutes. Newcastle coal held at $139 per tonne on Wednesday (2026-09-16). At current JKM levels, the economics increasingly favour switching for buyers without long-term supply contracts.4
US LNG exporters have maintained record volumes throughout. American producers shipped record amounts in the first half of 2026, with Morgan Stanley forecasting Lower 48 production growth of roughly 3 billion cubic feet per day this year. A Reuters column in August (2026-08-23) warned that forward gas and LNG prices in Europe and Asia, which together account for over 80% of US LNG shipments, had climbed to levels that risk pricing out cost-sensitive buyers, narrowing the addressable market for American cargoes even as output expands.6,7,2
Morgan Stanley's June (2026-06-09) note described the $25 per MMBtu target as implying upside of more than 30% to the forward curve at the time. JKM has since cleared that level. Whether Chinese term buyers restart purchases for October and November delivery, or extend the current pause into Q4, offers the first concrete read on whether the executive rebound call carries any near-term weight.3