India's natural gas consumption rose to 197 million metric standard cubic metres per day (mmscmd) in June 2026, driven by growth in city gas and refinery sectors. While demand is recovering, the industry faces pressure from high global LNG prices and intense competition for supply. Investors should monitor how rising import costs and shifting global trade patterns affect domestic gas-reliant businesses.
India's natural gas consumption staged a recovery in June 2026, reaching 197 million metric standard cubic metres per day (mmscmd). This rebound brings the country's gas usage close to pre-disruption levels, supported by a broad-based increase in demand across several key industrial segments. Excluding the power sector, consumption grew by 7% month-on-month, signaling that the recovery is rooted in diverse areas of the economy rather than a single source.
A Shift in Supply Sources
A major change has occurred in how India sources its Liquefied Natural Gas (LNG). In a significant shift from past patterns, the United States has emerged as the country's largest supplier for the May-July 2026 period. This change comes as imports from Qatar have declined sharply, falling 91% year-on-year. While this pivot helps secure necessary volumes, the logistics of sourcing from different regions, combined with ongoing competition from major buyers like China, adds complexity to the supply chain.
Broad Industrial Demand
The recovery was led by strong performance in city gas distribution (CGD) networks, refineries, and other miscellaneous industrial users. Imports played a crucial role in meeting this demand, as domestic gas production remained relatively flat. In June alone, LNG imports jumped 13% compared to the previous month, now accounting for 110 mmscmd. This heavy reliance on foreign supply means that India’s import dependence remains high at 56%, leaving the sector exposed to fluctuations in global gas prices.
The Challenge of High Costs
While demand is growing, the financial environment for the gas sector remains challenging. Asian spot LNG prices have trended upward, recently surpassing $20 per million British thermal units (MMBtu). For Indian companies, these elevated prices create pressure on operating margins, as the cost of raw material inputs rises significantly. If global prices remain high, companies may find it difficult to pass on these costs to consumers, particularly in price-sensitive sectors.
Outlook and Monitorables
Looking ahead, the market may see a temporary cooling of demand. While June and July showed resilience, analysts expect growth to soften in August due to seasonal factors and lower activity in key industrial hubs like Morbi. Investors will likely watch for two primary triggers in the coming months: the stability of international LNG prices and the ability of domestic gas-consuming companies to maintain their profit margins despite higher import costs. Any further disruption in supply chains or a continued rise in global competition for flexible LNG cargoes could tighten the availability of gas for Indian industry, making the pace of imports and the cost of procurement the key figures to track.