Europe’s winter LNG scramble doubles Asian gas prices, squeezing China and South Korea

Europe's urgent push to stockpile natural gas ahead of winter has intensified competition for a shrinking global pool of LNG cargoes, sending prices surging across Asia and forcing demand destruction in China while pushing South Korea's electricity production costs sharply higher.

The JKM benchmark for Northeast Asian spot LNG prices climbed above $23 per MMBtu in late August, more than double pre-war levels. Asian LNG prices averaged $21 per MMBtu in August 2026, compared to $12 per MMBtu a year earlier. The price spike stems from the disruption of Qatari and Emirati LNG exports through the Strait of Hormuz since the U.S.-Iran war began, with QatarEnergy having extended its force majeure on LNG deliveries through at least mid-October.chosun+5

South Korea Feels the Squeeze

South Korea's gas price for power generation hit 24,806.69 won per gigajoule in September, a 38.7% increase from a year earlier and a 9.2% jump from August alone, according to Korea Gas Corporation. The surge has driven the System Marginal Price — the wholesale rate at which Korea Electric Power Corporation ↗ 3.45% purchases electricity — from 103.54 won per kWh in January to 148.91 won in late August, a 44% increase.chosun

Under South Korea's power market structure, LNG-fired plants set the marginal price for the entire wholesale market, meaning rising gas costs ripple directly into electricity rates. Kim Tae-sik, a researcher at the Korea Energy Economics Institute, told the Chosun Ilbo that "when Europe aggressively purchases LNG to secure reserves, Asia has no choice but to raise prices".chosun

China's Demand Destruction

The pain is also evident in China, the world's largest LNG importer. Chinese LNG imports are on track to fall 18% in August from a year earlier to roughly 5.2 million tons, according to Kpler data cited by Bloomberg, reversing three consecutive months of year-on-year gains. Price-sensitive industrial consumers have pulled back as spot costs have roughly doubled.investing+2

A Shrinking Global Pie

The underlying problem is structural. The International Energy Agency reported that Qatar and the UAE's LNG shipments fell by 35 billion cubic meters from March to June compared to the same period last year, and global LNG production dropped about 4% year-on-year. EU gas storage stood at roughly 61-64% in late August — well below the 76-90% levels recorded at the same point in recent years — forcing European buyers into aggressive spot purchases that compete directly with Asian utilities for flexible LNG cargoes.enerdata+2

Experts warn the worst may be ahead. Cho Hong-jong, a professor at Dankook University, said "preemptive measures are urgently needed to stabilize supply by appropriately balancing long-term contracts and spot purchases, diversifying import sources, and minimizing the impact of rising fuel costs on the power market and electricity rates".chosun