LNG Special Report: Geopolitical tensions, flex in EU storage directives and accelerating LNG supply growth easing the LNG market tightness
Northeast Asia’s LNG demand is weakening, shaped by reduced Chinese gas demand. While European LNG imports reached a record high in Q1 due to a cold winter depleting gas storage, expectations of more flexibility in EU storage targets have eased the market. The supply situation is becoming more favourable, supported by the rapid ramp-up of Plaquemines in the US and record exports from Qatar. But the influx of new LNG carriers continues to outpace LNG supply growth, resulting in historically low utilisation rates and forcing more steam turbine vessels into layup or retirement.
Key Takeaway
LNG Market
As market enters the shoulder season, the outlook for summer 2025 has weakened on the back of three key drivers:
- Deteriorating Chinese LNG demand, driven by US-China trade war slowing industrial output
- Increased flexibility in EU storage targets looks set to ease summer refill requirements, restoring a winter-summer premium for 2025-26
- Improving supply outlook driven by Plaquemines’ rapid ramp-up in US and record Qatar exports, where output hit >110% of capacity
LNG Shipping
A wave of newbuilds and reduced voyage distances continue to weigh on spot rates. Record low utilisation is forcing layups and scrapping in the elderly steam-propelled fleet.
Chinese-built LNG vessels escape extra fees in US under the proposed USTR directive. But lack of clarity still clouds longer-term aspiration to create a US-built and operated LNG fleet.
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