Japan is expected to surpass China as the world's largest importer of liquefied natural gas (LNG) in 2023. According to analysts, this change occurs for the first time since 2022 and is driven by high LNG prices and sufficient storage in China, which has limited the country's purchases.
Details of Japan and China's Imports
According to estimates, Japan's LNG imports will reach 62 million tons, while China's imports are expected to be 61 million tons. Additionally, Kpler analysts have forecasted 63 million tons for Japan and 62 million tons for China. This change in import status comes as China became the world's largest LNG importer in 2021, but restrictions from two years of COVID-19 lockdowns allowed Japan to regain this position in 2022.
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Factors Affecting LNG Imports
In 2023, the Strait of Hormuz crisis, which halted LNG shipments from Qatar and the United Arab Emirates, led to an overall decrease in demand for LNG imports in Asia due to high spot cargo prices in a suddenly tight market. However, the decrease in demand from China this year is more pronounced, helping Japan to surpass China.
Chinese LNG buyers have acted early to stockpile gas amid the Iran conflict, helping Beijing to build sufficient reserves before winter. According to reports from Rystad Energy analysts, by the end of September, China's underground gas storage was 80% full. The reduced demand for spot supplies from China this winter could mean relief for other LNG customers in Asia and Europe, many of whom are struggling with high spot LNG prices and fierce competition for supplies that do not need to pass through the Strait of Hormuz.
Japan has also taken steps this summer to reduce gas-fired electricity generation in favor of coal, as LNG prices remained high. LNG prices in Asia have surged to their highest levels in four years, and with few cargoes able to exit the Strait of Hormuz, competition with Europe for winter supplies is intensifying.
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