Asian LNG up 62% as Japan, South Korea pivot back to coal

Asian LNG up 62% as Japan, South Korea pivot back to coal Wood Mackenzie expects the Asian supply squeeze to cut the region's LNG demand growth in 2026 as utilities lean on coal through summer maintenance. Asian LNG spot prices have climbed roughly 62% since the supply disruption began, according to Reuters figures cited in mid-May (2026-05-19) reporting.⁴ The move has already changed how the region's largest buyers run their power systems.⁴ That matters because Asia is the world's biggest LNG-importing region, and the price shock is feeding straight into generation decisions rather than being absorbed quietly.³ When the marginal cargo gets this expensive, utilities reach for coal, and the gas they walk away from reshapes the balance for everyone else.³ The shift shows up in consumption data. Coal use rose 11.1% year-on-year in Japan and 39.7% in South Korea in April, according to Reuters.⁴ Both jumps track the April-through-early-May window when LNG supply was disrupted and prices surged, with utilities leaning on coal to cover demand during nuclear plant maintenance ahead of summer.⁴ Wood Mackenzie has put a figure on the demand hit. "The conflict will significantly reduce Asian LNG demand growth in 2026," said Lucas Schmitt, an analyst at the consultancy.³ Analysts say high prices and supply uncertainty are likely to curb LNG demand growth across the region, not just inside the immediate disruption window.³ The flow data point to disruption rather than a simple demand story. LNG deliveries into Japan, China, South Korea and Taiwan ran at about 15.94 million tonnes in February, down nearly 19% from the previous month, Reuters reported, citing Refinitiv Eikon shipping data.⁵ That contraction against firm power demand is what forces the coal pivot.⁵ There is a contrary signal worth holding onto. Asian LNG prices had been falling earlier, dropping in the week of 2026-05-11 to their lowest in nearly 19 months as more supply hit the market and buying interest faded.⁵ The 62% surge sits on top of a market that had just been oversupplied, which means the spike may prove as sharp coming down as it was going up.⁵ The longer-term worry predates the squeeze. Wood Mackenzie said in a mid-May (2026-05-19) analysis that local gas production across Asia is falling, with the exception of China in the near term.² The region needs incentives and investment in domestic supply to avert the next gas crisis, the consultancy noted, which is a slow fix for a fast problem.² New supply is coming, but from the wrong side of the ocean for Asian buyers. The EIA expects Lower 48 marketed gas production to rise 3% this year versus 2025, led by the Permian at 29.2 Bcf/d, up 6%, with a further 10% of Permian growth forecast next year.¹ That feeds US export capacity, yet it reaches Asia only when the arbitrage justifies the voyage.¹ For now the trade is coal-for-gas substitution that holds as long as the price gap holds.⁴ Watch whether the surge sticks or unwinds toward the mid-May lows, and whether Japanese and Korean coal burn stays elevated through summer peak demand.⁴ A return of Asian spot prices toward the 19-month lows would reopen LNG's edge over coal; a sustained premium keeps Asian utilities loyal to coal.⁵