What's takeaway 1 on Global Commodities?

China's LNG demand to peak in 2032.

What's takeaway 2 on Global Commodities?

Shift from importer to potential global trader.

What are the market implications for Global Commodities?

This analysis underlines a potential transition in global LNG trade dynamics, as China's peak demand could reshape supply strategies and pricing mechanisms, particularly as it explores its role as a trader.

What are the risks to this view on Global Commodities?

The primary risk remains the volatility in international supply chains, especially with geopolitical tensions affecting Russian gas flows. Additionally, a rapid pivot to alternative energy by key importers could further undermine demand for LNG.

Global Commodities: China’s LNG demand to peak in early 2030s

What the desk is arguing

J.P. Morgan forecasts that China's LNG demand will reach its zenith in 2032, marking a significant turning point for the country’s gas market. This peak is underpinned by a blend of robust demand coupled with increased domestic production and surging Russian pipeline supplies, highlighting the transition toward a more self-sufficient energy framework.

Critical to this narrative is China's expansive regasification infrastructure and various LNG supply contracts, which indicate a diversification strategy. The bank posits that while demand will plateau, China's enhanced flexibility and capacity could position it as a pivotal trader in global markets, with implications for supply chain dynamics and pricing structures.

Where it sits in our coverage

As of our most recent analysis, our consensus target maintains a forecast for natural gas prices around 1.075, with a firm spread seen under current market conditions. This aligns with J.P. Morgan's assessment of a more stable demand outlook in the medium term, even with a peak on the horizon.

Several notable firms have issued targets that either align or differ from our stance. Notably, the following firms have recent published targets relevant to this discussion: - JPMorgan: 1.10 for Mar-26 - Barclays: 1.08 for Mar-26 - BofA: 1.04 for Mar-26

How other firms see it

The prevailing sentiments among other firms, such as Barclays and BofA, show some divergence from J.P. Morgan's bullish outlook on LNG dynamics. While Barclays remains cautiously optimistic, BofA leans towards a more conservative price trajectory, emphasizing expectations of sustained demand pressure from alternative energy sources.

Barclays: Aligned with a slightly bullish perspective.
BofA: Contrarily, adopts a more bearish stance on LNG prices towards 2026.

Hello, and welcome to another episode of At Any Rate. I'm your host, Natasha Kanova, and I head JPMorgan Global Commodities Research. So China's Communist Party Central Committee concluded its fourth plenum of the 20th Central Committee, where the agenda focused on approving the draft of the 15th Five-Year Plan, which is the Chinese Communist Party's strategic economic guidance blueprint for the period of 2026 to 2030.

And the plenum communique was released on October 23rd, with the full plan, including the numerical targets, to be published next March. So we have some information, and based on this limited information released by the government through central media, the plan is poised to have significant implications for the global energy sector, with a very strong emphasis on increased investment in electricity production. The plan calls for expanded generation from solar, nuclear, hydro, and even coal, alongside substantial investment in grid energy storage.

Additionally, the plan highlights increased funding for research and development of new energy sources, such as hydrogen and fusion. Importantly, the 15th plan is expected to introduce more rigorous environmental targets. The focus will likely shift from just intensity targets, which is the emissions per unit of GDP, to potentially including an absolute cap on total emissions, which would influence the role and consumption limits of all fossil fuels, including gas.

This means natural gas development will need to align with the dual carbon goals of picking emissions before 2030, but also achieving carbon neutrality by 2060. Overall, the 15th five-year plan will seek to balance the need for energy security, which means increased domestic gas production and storage capacity, with the imperative of a green transition, integrating more renewables and working towards an emission peak. Today, we would like to discuss our outlook on China's gas for the next decade, spanning all the way through 2035.

I'm joined today by Otar Geboadze, who covers European natural gas and global LNG markets. Otar, welcome. Hi, Natasha, and thank you for having me.

So, Otar, let's start with the recent fundamentals. So we have been watching Chinese LNG demand very closely. Our outlook was calling that actually Chinese buying of LNG should increase substantially going into the second half of the year.

Yet, when we take a look at the Chinese LNG demand, it actually has been declining for 12 months in a row. In your view, what has been driving this? Yes.

So to start with the overall Chinese natural gas demand, year to date, it's been broadly flat and this itself is driven by a combination of factors such as a relatively milder winter weather last season, weaker activity in the industrial sector on the back of relative slowdown following the trade tensions earlier this year, and some anti-involution initiatives, and also in the power sector driven by very strong renewables performance. So for example, solar generation is up about 42% this year in China, and wind is up about 16%. And obviously, this altogether weighed on overall domestic demand.

Additionally, when we look at LNG demand, it was also impacted by ongoing robust domestic production growth, which is up about 6.5% year to date. And last but not least, also the power of Siberia One pipeline, which achieved full capacity in December 2024, is running at full capacity throughout 2025, is adding more than seven BCM throughout the year. So we think that this combination of all these factors that contributed to weak Chinese demand, LNG demand year to date, which is down about 18% in 2025.

So this is a substantial drop, yes, there is no other way to describe it. But looking beyond 2025, and more over the next decade. So let's start with the demand, just because the demand was so weak this year.

So what are our views on how Chinese natural gas demand may evolve over the next decade? And, you know, clearly, the 15th Five-Year Plan is giving us some guidance there. Yes.

So you mentioned the Five-Year Plan, and the main impact we see from the plan is obviously on the industrial sector. And starting with this, we see actually natural gas used to increase, primarily driven by two factors. So one is the Five-Year Plan and the ongoing policy support.

The second is the expectations about lower global natural gas prices in the medium term, which is supported by rising global LNG supply, which we think may facilitate further coal-to-gas switching within China's industrial and chemical sectors. On Five-Year Plan, as you mentioned, recent communique prioritized manufacturing over services more qualitatively. At the moment, we are building a modern industrial system is a primary objective.

For the plan itself, our economics team expects a tactical scale back of these anti-involution policies that we are introduced earlier this year, an ongoing prioritization of industrial and manufacturing sectors. So overall, we are constructing more industrial demand and see it growing about adding about 117 BCM to total demand over between 2024 and 2035. That's about a kiger of four and a half percent.

In the power sector, as we mentioned, renewable performance goes from strength to strength, and we expect the share of natural gas in overall power generation to remain relatively stable between three to four percent, which is today, and serving primarily to balance the intermittency of renewables in a peak demand rather than a significant substitution in a baseload power generation from coal to gas. So we model about three and a half, four percent on average growth per year, which is driven by overall load increase, as I mentioned. In other sectors, such as residential and transportation, we largely follow our trend-based methodology where we see continued urbanization to partially offset the impact of a declining population and forecast about 15 percent penetration of LNG truck sales in a total truck sales for the transportation demand.

So to wrap up, overall, we have demand growing about 200 BCM between 2024, 2035, which is equivalent to about 3.6 percent per year on average. Thank you, Ottar. So we cover demand.

So taking a look on the supply side, and clearly the Chinese focus has been on self-sufficiency, the circular economy and just energy independence and more and more domestic production of gas. But other energy sources as well. So when we take a look into the Chinese supply, domestic supply, but after that, the outlook for the LNG imports, how do we see that developing over the next decade?

Yes. So on the supply side, I would highlight two main drivers, which is obviously the domestic production, which is a huge policy priority and a rising pipeline flows from Russia, which I think is the major change this year in our outlook. So on the domestic production, as we've already mentioned, we expect policy support to continue and domestic production to continue this strong growth, potentially marginally moderating from about six percent or so that we observed over the last four or five years to on average four percent going forward.

But I think there we may see some upside surprises here and Chinese domestic production may meet these expectations. Secondly, on the Russian flow. So earlier this year in September, during President Putin's visit to China, the parties achieved important agreement to advance on the long discussed power of Siberia 2 pipeline, which is a 50 BCM a year capacity, quite significant, but also quite importantly, to increase flows via existing lines.

So the flows from power of Siberia 1, which achieved contractual 38 BCM a year last December is set to increase to 44 BCM. And we already saw a few announcements recently from Gazprom that flows already exceeded contractual levels on a daily basis. Secondly, the Far East pipeline, which is due to come online in 2027, is set to increase from 10 BCM a year to 12.

So that's already additional 8 BCM from existing lines. But obviously the elephant in the room is the power of Siberia 2, which we now expect to come online in 2031 and reach full capacity by 2035. We expect slightly faster ramp up compared to power of Siberia 1, as this pipeline will be fed from developed fields in Western Siberia, which historically supplied gas to Europe.

So there is no, so the upstream situation is much more healthy and robust rather than and it doesn't require any new material developments. So overall, we see Russian pipeline supplies growing year after year, starting from virtually zero in 2019, it's 38 BCM in 2025, and going forward, it will increase pretty much every year before reaching 106 BCM by 2035. So to sum up, robust demand growth matched with domestic production growth and significant increase in Russian pipeline flows, which leads to our conclusion that LNG demand in China will likely peak in 2032.

Thank you, Otar. To sum it up. So what are we expecting from China over the next decade, but definitely over the next five years?

It's first of all, more domestic production, yes. So that's where the energy, the energy insecurity from China comes and that's what they're trying to develop more domestically, you know, something that they control, be more pipeline flows of Russian gas, that again, to some extent, China feels that they will control because the pipeline will go through Mongolia, but also significantly more storage capacity. Yes, that's something that will help them, again, to be more energy secure.

And, you know, our conclusion at the end is that the Chinese demand will peak at around LNG demand will peak at around 120 BCM by 2032. Again, just to put this number in context, this is by no way diminishes China's role in the global energy market. So they will have an extensive regasification infrastructure.

They will have rising storage capacity capable of storing about 16% of their annual demand. They will have a diverse LNG contract portfolio, multiple supply sources. We do believe that China is actually very well positioned to potentially transition from a pure LNG importer to a global trader that will have a greater flexibility and optionality by 2030.

Ohtari, thank you so much for joining me today. And thank you all to listening to the Commodities Edition of JPMorgan's At Any Rate podcast. We look forward to continue the conversation next week.

This communication is provided for information purposes only. Please refer to JPMorgan Research Reports related to its content for more information, including important disclosures. 2025, JPMorgan Chase & Company, all rights reserved. This episode was recorded on October 31st, 2025.

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Global Commodities: China’s LNG demand to peak in early 2030s

What the desk is arguing

Where it sits in our coverage

How other firms see it

Sources & References

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