Key facts
- China's LNG imports increased by 8.3% year-on-year in June to 5.68 million tons.
- This is the second consecutive month of import growth for China.
- The closure of the Strait of Hormuz due to Middle East hostilities has impacted Qatari LNG supply.
- Asian and European LNG prices have risen due to competition for alternative cargoes.
- Major Chinese LNG buyers are in talks for long-term supply contracts outside the Persian Gulf.
China's liquefied natural gas imports saw an 8.3% year-on-year increase in June, reaching 5.68 million tons, according to official customs data. This marks the second consecutive month of import growth, following a period of decline in February, March, and April. The recovery began in May, with buyers purchasing more cargoes from mid-April onwards.
The heightened demand from China is expected to tighten the global LNG market in the coming months. This situation is exacerbated by the renewed closure of the Strait of Hormuz due to escalating hostilities in the Middle East, which has taken Qatari LNG supply off the market. Consequently, prices for Asian LNG and Europe's benchmark gas have surged as competition for alternative cargoes intensifies.
Asia has been more successful in securing LNG cargoes, leaving Europe facing challenges in refilling its gas storage facilities, which ended the heating season at multi-year lows. In response to supply chain risks, major Chinese LNG importers, including PetroChina and Sinopec, are reportedly negotiating long-term supply agreements with exporters not dependent on the Strait of Hormuz. While China does not intend to cancel existing contracts with Qatar, it is actively seeking to diversify its LNG sources away from the Persian Gulf.