I. Overall Market: Rise followed by stagnation, partial loosening, shift in supply-demand game

China’s domestic LNG market was mainly on an upward trend this week, but the upward momentum slowed significantly and divergence emerged. Supported by strong costs and low inventories in the early stage, liquefaction plants collectively pushed prices higher. In the later period, high prices triggered resistance from downstream users, weakening purchasing activity. Factories with relatively high inventories took the lead in cutting prices, while seaborne LNG also loosened slightly. The market shifted from a "unilateral upward trend" to a new stage of supply-demand game, high-level fluctuation and partial correction.

II. Domestic LNG: Supported by costs and low inventories; downstream resistance causes divergence

Core upward momentum (early week)

High rigid costs: The bidding price of feed gas stood at 2.9–3.0 yuan/m3, bringing production costs of liquefaction plants to around 4,950–5,025 yuan/ton, up by more than 360 yuan/ton from March, leaving almost no room for price cuts.

Tight supply and low inventories: Major production areas entered a concentrated maintenance period, with the national operating rate at only about 47%, leading to declining output. Coupled with tight feed gas supply, shipments ran smoothly and inventories remained at a moderate-low and controllable level, giving upstream producers a strong willingness to support and raise prices.

Phased rigid demand support: LNG remained cost-competitive compared with pipeline gas, LPG and diesel. Supported by rigid downstream demand, the "buy on rallies" mentality boosted early procurement.

Turning point and divergence (late week)

Increasing downstream resistance: As prices kept rising, affordability among downstream users (industrial, point supply, vehicle fuel) weakened notably. Purchasing turned to wait-and-see for rigid demand and small-scale on-demand buying, resulting in overall weak demand.

Passive price cuts by high-inventory plants: A small number of liquefaction plants with slower sales and higher inventory levels took the lead in lowering offers (by 50–150 yuan/ton) to reduce inventories, recover funds and ease financial and storage pressure, driving regional price loosening.

Market divergence: Plants with low inventories maintained firm high prices, while those with high inventories offered discounts to boost sales. Regional price gaps widened and the general upward trend stalled completely.

III. Seaborne LNG (Terminals): Under pressure at high levels, partial price cuts amid supply-demand and strategy adjustments

Early support

Tensions in the Middle East and unstable navigation through the Strait of Hormuz reduced arrivals and disrupted scheduling of Middle Eastern supplies, which account for 30% of China’s LNG imports. Terminals controlled shipments and maintained high prices to support the market.

Reasons for this week’s loosening

Easing international expectations: A temporary cooling in Middle East tensions and falling European and US gas prices narrowed the Asian spot premium, weakening support for high terminal prices.

Drag from domestic demand: Price cuts in domestic LNG and broad downstream resistance left high-priced seaborne LNG (above 5,800 yuan/ton) with limited uptake, prompting some terminals to offer small discounts to move cargoes.

Inventory and strategy adjustment: Rising inventories and growing sales pressure led some terminals to abandon extreme hoarding and cut prices slightly to stabilize shipment rhythm.

IV. Core characteristics and logic summary

Shift from supply-demand mismatch to game: Tight costs and supply form the floor for price increases, while downstream resistance to high prices acts as the ceiling, with bullish and bearish forces moving toward balance.

Structural market divergence: Low inventories support firm prices while high inventories trigger corrections; inland markets follow the decline and coastal seaborne LNG loosens slightly, narrowing the sea-land price gap.

Fragile demand: High prices strengthen substitution effects (some industrial users switching to pipeline gas) and intensify wait-and-see sentiment. With no real incremental demand, sustained sharp increases are unsustainable.

V. Short-term outlook

A unilateral sharp rise is unlikely. Prices will most likely maintain high-level fluctuation with partial mild corrections. Although costs and low inventories continue to provide support, upward space will be capped by downstream resistance, inventory divergence and loosening seaborne LNG. The market will focus on stable pricing, inventory digestion and game-based bargaining.