South Korea’s LNG market in December 2025 was shaped by fluctuating demand signals, short-lived weather-driven buying, strategic LNG cargo diversions, and strong momentum in the LNG shipbuilding sector. Market participants continued to weigh inventory levels, fuel-switching economics, and rising import costs amid geopolitical and currency pressures.

LNG Market Activity and Demand

Spot LNG activity showed intermittent buying interest but remained broadly subdued.

Trading firm Posco sought a February-delivery cargo and separately purchased a January-delivery cargo at prices in the low $10s per million Btu. State-owned Kogas issued a swap tender offering two January-loading cargoes from the US Sabine Pass terminal in exchange for two delivered cargoes across January and February, with arrivals scheduled between early January and mid-February. The tender was subsequently awarded.

Despite these transactions, traders described overall northeast Asian spot demand — including South Korea — as muted. Market participants said major buyers were monitoring declining spot prices and could step in opportunistically but did not expect sustained or large-scale purchasing in the near term.

Imports and Inventory

South Korea imported 3.28mn t of LNG in November, up 3.6pc from October but down 17pc year on year.

The annual decline was attributed to warmer-than-average weather and increased coal-fired power generation. Australia remained South Korea’s largest LNG supplier, although Australian volumes fell by nearly 10pc month on month. Imports from Malaysia and Qatar rose sharply, increasing by 21pc and 63pc respectively.

The average LNG import price declined to $9.60 per million Btu — the lowest level in four years — providing cost relief for buyers despite adverse currency movements.

In late December, at least five LNG carriers diverted from China to South Korea as traders anticipated colder conditions. One vessel, Rex Tillerson, discharged at South Korea’s Gwangyang terminal on 21 December after initially declaring for China. Even so, market sources said well-filled inventories limited the scope for additional prompt demand.

Weather Developments

Weather forecasts briefly influenced demand expectations.

South Korea experienced a short cold snap between 25 and 27 December, prompting cold wave warnings and wind wave advisories for central regions. Minimum temperatures in Seoul were forecast to fall well below seasonal norms, reaching levels not seen since early 2024.

However, the cold snap was expected to be short-lived. Temperatures were forecast to rebound above seasonal averages from late December. For January, the Korea Meteorological Administration projected a high probability of near or below-average temperatures, but without indicators of prolonged extreme cold that would materially lift gas demand.

Energy Policy and Power Generation

Government policy continued to focus on managing energy costs.

South Korea extended tariff waivers on LNG and LPG imports into early 2026 to offset rising import costs driven by the weaker won. The zero tariff on LNG imports will remain in effect through the first quarter.

Kogas reported year-on-year growth in November sales, exceeding 3mn t. Sales to the power sector rose to 1.3mn t, while city gas sales increased to 1.7mn t, supported by colder temperatures earlier in the heating season.

In electricity generation, coal-fired output was ramped up to stabilise wholesale power prices impacted by currency weakness. Coal accounted for about 33pc of generation in December up to 23 December, while gas-fired generation fell to around 27pc, marking a shift from December 2024.

Longer term, South Korea’s plan to phase out coal by 2040 leaves an estimated 40GW capacity gap, with LNG expected to play a key role. The government ruled out new nuclear construction, while regulators delayed approval for the Saeul reactor 3. Kogas also agreed to supply 290,000t/yr of gas to Korea Energy for 10 years starting in 2027 under its individual rate system.

Shipping and Shipbuilding

South Korea’s LNG shipbuilding sector remained highly active in December.

Hyundai Samho received multiple LNG carrier orders, including a three-vessel contract from Capital Clean Energy Carriers. Samsung Heavy Industries secured a two-vessel deal priced at the lower end of this year’s LNG carrier range, while Hanwha Ocean won an order for seven LNG carriers from a European shipowner.

Although Korean shipyards still had some LNG carrier slots available for late 2028, industry participants said these were likely to be filled quickly.

Geopolitical and Economic Pressures

Geopolitical tensions in the region added to market uncertainty.

Strains in the East China Sea contributed to further depreciation of the South Korean won, which weakened to more than 1,470 to the US dollar in mid-December. The weaker currency increased the cost of imported energy, raising generation costs for utilities.

Supply security also remained in focus, with a significant share of South Korea’s LNG imports — including Qatari, Australian and southeast Asian volumes — transiting through strategic shipping lanes near Taiwan, exposing imports to potential disruption risks.

Outlook

In December, South Korea’s LNG market was defined by flexibility rather than growth.

Weather-driven demand proved temporary, inventories remained comfortable, and fuel-switching to coal helped stabilise power prices. LNG’s structural role in the energy mix remained intact, even as buyers balanced short-term demand, cost pressures, and longer-term transition objectives.