U.S. exports of LNG are already at record highs so far in 2025, but forecasts for above-average temperatures across key Asian import markets could lift them even higher this summer.
Average temperatures for Japan, South Korea and China are all forecast to hold above normal through the end of August, likely boosting use of power-hungry air conditioners.
That higher demand load will in turn spur utilities to lift generation from all available sources, including from natural gas plants fed mainly by imported liquefied natural gas (LNG).
That upbeat demand outlook is good news for U.S. LNG exporters, who are riding a wave of strong demand from Europe but face a potential slowdown in European buying this summer.
HOT AND STICKY
Temperatures across East Asia are already hovering above long-term averages, and are expected to continue trending higher over the next two months.
Average temperatures in Japan – the second largest LNG importer after China in 2024 – are expected to register around 6% above the long-term average from now through the end of August, data from LSEG shows.
South Korea, Taiwan, Hong Kong and several cities in China are forecast to register similar readings.
As the northern hemisphere summer coincides with the rainy season across much of Asia, the forecasted hot temperatures are likely to be mixed with high humidity levels.
That in turn will likely spur heavy use of air conditioning systems, which can push power demand levels sharply higher during heatwaves and strain regional power grids.
GAS HEAVY
Asia’s electricity producers are used to the summer climb in electricity demand and adjust output levels accordingly.
In 2024, average electricity demand during June, July and August – the hottest months of the year – was around 9% above the monthly average for the year as a whole.
To accommodate that higher load, utilities lifted output from all power sources, but especially from fossil fuel plants which supply power that can be dispatched on command when output from renewable sources drops off.
Both gas-fired and coal-fired generation across Asia during June, July and August last year averaged around 5% more than the 2024 monthly average, Ember data shows.
LNG RELIANCE
To feed the higher demand for power anticipated during June, July and August, Asian LNG importers tend to book higher LNG volumes during May, June and July than during other months.
Between 2021 and 2024, U.S. LNG exports to Asia during May, June and July averaged around 7.8 million metric tons a month, according to data from commodity intelligence firm Kpler.
That compares to an average of 2.23 million tons a month to Asia overall for the 2021 to 2024 period, and underscores how important LNG is as a power fuel during the Asian summer.
PRICE POINT
A key driver of potential Asian purchases will be the price of LNG, which needs to compete with coal in power generation and has recently proved too dear for many Asian consumers.
U.S. LNG export prices have averaged around $8.54 per thousand cubic feet so far in 2025, up 35% from the 2024 average, according to data from LSEG.
That said, any rise in Asian LNG purchases would likely come just as LNG orders by Europe tend to retreat to their annual lows, which could apply downward pressure to prices.
Over the first half of 2025, European markets accounted for 70% of all U.S. LNG exports, Kpler data shows, while Asian markets accounted for just under 20%.
Average monthly volumes of U.S. LNG dispatched to Europe during January to June were around 6 million tons, compared to around 1.6 million tons a month to Asia.
A key caveat that will govern Europe’s LNG appetite going forward is how quickly gas storage operators there want to replenish inventories, which were depleted over the past winter and must be restocked ahead of next winter.
Currently, Europe’s gas stockpiles are around half full, which compares to around 70% full at this time of year in 2023 and 2024, according to LSEG.
Europe’s natural gas inventories are being replenished after steep draws over winter; currently at 51% of capacity
Thomson ReutersEurope’s natural gas inventories are being replenished after steep draws over winter; currently at 51% of capacity
If gas storage operators opt to restock as quickly as possible, then Europe’s imports of LNG could remain quite strong over the coming months.
But if Europe’s storage firms opt instead to wait until the autumn to replenish stocks, or refill tanks from pipelined supplies, then Europe’s LNG purchase volumes could drop sharply.
Such a sudden wilt in European orders would likely trigger an aggressive markdown in prices, however, and in turn lure fresh buying interest in Asia where power firms are already primed to boost output.
That suggests that overall U.S. LNG export volumes should remain fairly robust for the near term at least, regardless of where the buyers reside.
Source: Reuters