How is Gujarat’s Morbi ceramic cluster driving India’s LNG demand?

The ceramic manufacturing hub of Morbi in Gujarat, which produces nearly 90% of India’s ceramic tiles and sanitaryware, has pushed LNG imports following the non-availability of propane.

India is emerging as the price-inelastic large LNG buyer in Asia, continuing to import liquefied natural gas (LNG) despite elevated global spot prices and absorbing the cost premium following disruptions to supplies from Qatar, according to a report by Equirus Securities.

Imports have rebounded despite elevated spot LNG prices as India rapidly reroutes sourcing after a Qatar supply disruption. The brokerage said India's LNG imports recovered to 2.1 million tonnes (mt) on May 26 from a low of 1.7 mt on March 26 and 1.9 mt in April 26, approaching the January 2026 peak.

This comes even as Asian spot LNG prices spiked to US$25/MMBtu in late March 2026 following Qatar's production halt and the closure of the Strait of Hormuz, before easing to around US$17-18/MMBtu in May, still around 70% above pre-crisis levels.

"While South Korea and Japan cut imports, India moved in the opposite direction, absorbing cost premium to keep volumes flowing," the report noted.

According to Equirus, record heatwave-driven electricity demand and additional LNG consumption from the Morbi ceramic cluster following the non-availability of propane contributed meaningfully to the increase in imports.

India's power consumption surged more than 11% year-on-year in May 2026, with peak demand crossing 270 GW, prompting the Ministry of Power to direct gas-based plants on standby for heatwave-related shortfall coverage, turning high-cost LNG into "a non-negotiable grid necessity", the report noted.

The report further noted that Qatar supplied around 45% of India's LNG imports in 2025 before its March 2026 shutdown. India rapidly rerouted to costlier alternatives, with US exports to India surging six-fold from 137 KT in January to 907 KT in May, while shipments from Nigeria doubled to 480 KT and Oman averaged around 500 KT per month during March and April.

"Despite paying a premium over legacy Qatari contract prices, India had no choice but to absorb the cost differential. That makes India the price-inelastic large LNG buyer in Asia. US LNG Atlantic routing, no Hormuz exposure is exactly what India needs now," Equirus said.