Kpler lowered its 2026 China LNG demand forecast to 63.5 million metric tons as it expects weaker industrial activity to weigh on consumption later this year, the firm said in a Wednesday note.
Kpler expects industrial activity to remain broadly stable through July and August before slowing in Q4, as weaker petrochemical, property and glass sectors reduce industrial gas consumption.
Analysts expect Asian spot LNG prices to remain rangebound through Q3 as restocking demand supports the market. The firm expects prices to turn more bearish in Q4 as weaker industrial LNG consumption eases buying interest.
China's apparent gas consumption fell 4% over the year to 34.98 billion cubic meters in April, according to the National Development and Reform Commission. Kpler estimates industrial gas demand declined by about 1.9 bcm over the year in May.
Industrial gas demand came under pressure as supply concerns surrounding the Strait of Hormuz lifted Asian LNG prices, Kpler said. The firm expects the US-Iran peace deal to ease geopolitical risks and boost Middle Eastern methanol exports to China.
Lower geopolitical risk following the US-Iran peace deal should increase Middle Eastern methanol shipments into China, loosening the domestic methanol market and weighing on local methanol production, Kpler said.
Methanol-to-olefin economics have recovered modestly since gross margins fell to -$108 per metric ton in early June. However, Kpler said weak downstream petrochemical demand is likely to cap further margin gains and limit additional gas consumption.
China's property downturn and persistent overcapacity across the solar supply chain are expected to reduce glass production in Q4, adding further pressure to industrial gas demand, according to the note.
China's transport-sector LNG demand has also begun to soften. LNG truck sales reached 13,900 units in May, holding broadly steady over the year while remaining above the five-year average.
Despite LNG's fuel-cost advantage over diesel, Kpler expects improving economics for electric heavy trucks to slow LNG truck adoption. Lower fleet utilization and weaker freight activity are also expected to weigh on demand through the fourth quarter.
Reflecting those headwinds, Kpler reduced its 2026 China LNG demand forecast by 200,000 mt to 63.5 million mt, citing weaker industrial gas consumption later in the year.