China will relinquish its position as the world's largest LNG (liquefied natural gas) importer to Japan in 2026. This prediction is due to declining demand caused by the energy shock resulting from conflicts in the Middle East and a continued drop in demand in China.
LNG Imports This Year
Companies ICIS and Kepler have predicted that Japan's LNG imports will reach 62 million tons this year, while China's imports will amount to 61 million tons. This comes as Japan's LNG imports last surpassed China's in 2022. The forecasts indicate that in 2026, Japan will be the largest LNG importer with 63 million tons, followed by China with 62 million tons.
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Reasons for Declining Demand in China
After years of rapid growth in LNG imports, China became the largest importer of this type of gas in 2021. However, since the outbreak of the coronavirus and a sharp decline in demand, China's LNG imports have decreased due to the availability of cheaper alternatives such as renewable energy and domestically produced gas. Analysts believe that forecasts for a mild winter and rising prices due to Middle Eastern conflicts have intensified the structural decline in demand this year.
Xiong Wei, Vice President of Rystad Energy, noted that China had filled 80 to 90 percent of its gas reserves by the end of September in preparation for winter, and the country's underground storage facilities have reached unprecedented levels in some areas. This indicates changes in consumption patterns and a reduced reliance on LNG imports.
Analysts also pointed to suppressed demand that cannot be measured and may rise again with the decrease in spot prices. Alex Siu, an analyst at ICIS, stated that rising prices have reduced demand for spot cargoes in the market by up to 15 million tons this year. Additionally, another analyst from the firm, Shou Fei, mentioned the restart of several nuclear reactors in Japan, which is seen as a factor in slowing demand in the country.
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