LNG market expected to fall further

The DES Northeast Asia market in January to November 2025 averaged at $12.35/mmBtu for prompt delivery, down 72cts from the corresponding period of the previous year. After Donald Trump was inaugurated as the US President on Jan 20, trade friction between the US and China heightened. The spot market hit the highest at about $16.65 in mid-February since late November 2023. But the market plunged by over $1.00 after less than one month as the Ukraine war was expected to end. The market was volatile in the first half of 2025, which was affected by words and actions of President Donald Trump, and world economy.

On the other hand, the market moved within a small range in the second half of 2025. While buying interest from end-users was sluggish, traders and portfolio players were active to cover short positions, which supported the market. In the second half of 2025, both the DES Northeast Asia market and the Title Transfer Facility (TTF) market in the Netherlands were moving in the range of around $10.00-13.00.

In 2026, the LNG market is forecast to drop further. This is because LNG supply is expected to rise. Starting with the 18.10mil mt/year No.1 train of the Golden Pass project in the US, the stage 3 expansion project of the 16.49 mil mt/year Corpus Christi project in the US and the 3.50 mil mt/year Costa Azul project in Mexico are scheduled to start up. European analysts estimate global annual LNG exports to rise by 40mil mt in 2026. Meanwhile, LNG demand does not increase in some developed countries along with uncertainty of the global situation. Thus, demand might not rise as much as supply in 2026.

Further, gas demand for fuels for power generation is expected to decline in Japan, which is also considered to be a bearish factor. LNG imports into Japan in 2026 were initially forecast to decrease 3.00 mil mt from 2025 partly due to a rise in operation rates of nuclear power plants and solar power stations and partly due to an overall decline in power demand. In addition, if the 1,356megawatt No.6 unit of Kashiwazaki Kariwa nuclear power station restarts at full capacity, annual LNG demand for power generation would decrease by 1.30-1.50 mil mt. On the back of weak demand, "DES Northeast Asia prices might fall below $10.00 around September," said a European analyst. Moreover, considering the futures market at present, "The DES Northeast Asia market might occasionally fall below $10.00 before July to September period," said a Japanese trading house.

Nevertheless, in China, domestic gas is predicted to grow mainly for fuels for trucks and city gas. On the other hand, as Russian pipeline gas is already supplied at full capacity, LNG imports by China are expected to return to around 75mil mt in 2026. Further, since it is difficult to forecast when supply of natural gas from Russia would restart, imports might increase by around 20mil mt in 2026 from the previous year in Europe. In addition, India and Southeast Asian countries are anticipated to try to buy spot cargoes at low prices.