Asia's liquefied natural gas (LNG) imports are expected to hit a six-month high in July, while European imports slide to their lowest in nearly two years.

While part of Asia's demand strength stems from seasonal demand during the summer peak, weak demand in Europe highlights how far the second-largest consuming region lags in building inventories to meet winter demand.

Commodities analytics firm Kpler estimates Asia's imports of this super-chilled fuel at about 23.05 million metric tons in July, marking a fourth consecutive monthly increase. That is roughly 6% higher than June and the same month last year.

The recovery in LNG imports is driven by China, the world's largest LNG importer, which has boosted imports in recent months. Kpler estimates July imports at 5.62 million tons, the highest since January and up 55% from 3.62 million tons in April, which was the weakest month in eight years.

China had earlier cut its LNG imports after spot market prices surged 143% following the U.S.-Israeli attack on Iran on February 28.

The spot price of LNG for delivery to North Asia rose from $10.40 per million British thermal units (mmBtu) on February 27 to a peak of $25.30 in the week ending March 20.

The price later fell to a low of $15.30 per mmBtu by June 19, two days after the United States and Iran signed a 60-day ceasefire agreement.

The ceasefire raised hopes for the full reopening of the Strait of Hormuz, allowing Qatar to resume LNG shipments and restore about 20% of global supply.

However, those hopes have since crumbled. The U.S. and Iran have resumed trade strikes, while Tehran declared the strait closed to ships and launched attacks on several vessels, including a Qatari LNG tanker that attempted to cross last week.

The fallout from resumed hostilities has begun affecting spot LNG prices, which rose to $18 per mmBtu in the week ending July 10, compared with $16.40 the previous week. The price spike is likely to deter Chinese buying, but is unlikely to dissuade some other Asian importers, particularly wealthier nations such as Japan, South Korea, and Singapore.

U.S. Market Volatility

It is also worth noting that these countries have begun replacing Qatari LNG cargoes with shipments from the United States, the world's largest LNG exporter, ahead of Australia and Qatar.

Japan's imports of U.S. LNG are expected to reach 940,000 tons in July, the third-highest on record, according to Kpler, or nearly 15 times the 60,000 tons imported in February, the last month before the Iranian conflict erupted.

Japan, the world's second-largest LNG importer, is on track to import 5.37 million tons in July, a five-month high and also above the 4.72 million tons imported in the same month last year.

Japan, the world's second-largest LNG importer, is on track to import 5.37 million tons in July, a five-month high and also above the 4.72 million tons imported in the same month last year. South Korea, the third-largest LNG importer, is expected to receive 870,000 tons of U.S. LNG in July, the third-highest on record for Kpler, up from just 13,000 tons in February.

Overall, Asia's imports of U.S. LNG are expected to hit a record 4.23 million tons in July, roughly triple the 1.34 million tons registered in February.

Asia's rising demand for U.S. LNG has led to a decline in Europe's imports from its largest supplier, with Kpler tracking only 3.94 million tons arriving in July, down from a peak of 7.79 million tons in January, the lowest since November 2024.

The diversion of U.S. cargoes to Asia has reduced total European LNG imports to an expected 6.90 million tons in July, the lowest since September 2024 and down from 8.72 million tons in July 2025. This decline in LNG imports comes as Europe lags behind its schedule for refilling natural gas storage, with energy analyst John Kemp's data showing a storage deficit of 158 terawatt-hours by July 7, about 22% above the 10-year seasonal average.

This means that European utilities are likely to have to raise spot LNG prices to levels that push Asian buyers such as China and India out of the market. It also means that the longer the effective disruption of Qatari LNG supplies under the Iranian conflict, the more likely spot market prices will rise.

Economic columnist at Reuters and energy affairs specialist.