Analysis of China LNG Market (This Week)

I. Overall Trend Summary

China’s domestic LNG market witnessed a sustained upward trend across the board this week, featuring a high-level upward pattern backed by strong cost support, tight supply, and passive demand acceptance. Both domestic-produced LNG and imported seaborne LNG raised prices simultaneously, with domestic and international markets resonating to push prices higher, resulting in a notable rise in the national average price compared with the previous period.

II. Core Drivers for Domestic LNG Price Hikes (Cost + Inventory)

High Rigid Costs with No Room for Price Cuts

In the first half of April, the bidding price of feed gas reached 2.9–3.0 yuan/m3, corresponding to a production cost of approximately 4,950–5,025 yuan/ton for liquefaction plants, representing an increase of over 360 yuan/ton from March. With a strong cost floor effect, upstream producers held a strong willingness to raise prices and left almost no room for concessions.

Tight Supply and Reasonable Inventory Levels Supporting Firm Prices

Domestic liquefaction plants entered a concentrated maintenance period, with the national operating rate at only around 47% and output falling month-on-month. Coupled with tight feed gas supply, shipments remained stable, and overall inventory stayed at a moderate-to-low and controllable level, with no pressure to sell at lower prices.

Highlighting Economic Advantages and Passive Demand Acceptance

Relative to pipeline gas, LPG and oil products, LNG regained cost competitiveness in industrial, vehicle fuel and point-supply scenarios. Supported by rigid downstream demand, a “buy on rallies” mentality boosted procurement, further driving price increases.

III. Drivers for Imported Seaborne LNG (Terminal Operations) (Geopolitics + Volume Control)

Geopolitical Disturbances Deteriorating Supply Outlook

Tensions in the Middle East and unstable navigation through the Strait of Hormuz disrupted shipments from major producers such as Qatar. Around 30% of China’s LNG imports come from the Middle East; in April, vessel arrivals dropped sharply with uncertain schedules, pushing the spot CIF cost to approximately 6,290 yuan/ton (an increase of 1,870 yuan/ton from March).

Terminals Controlling Volumes to Support High Prices

To lock in profits and avoid supply disruption risks, coastal LNG terminals proactively restricted shipment volumes, cut bulk supplies, and substantially raised prices simultaneously (mainstream increases of 50–280 yuan/ton). The average price of imported LNG exceeded 5,800 yuan/ton, significantly higher than domestic LNG.

IV. Market Characteristics and Potential Risks

Coordination between Domestic and Imported Gas, Narrowing Price Spread: High-priced seaborne LNG provided bottom support, while domestic LNG followed upward; cross-regional circulation was restricted, and regional divergence weakened.

Downstream Pressure and Fuel Substitution: As prices continued rising, downstream affordability gradually weakened. Some industrial users switched to pipeline gas, leading to increased wait-and-see sentiment.

Rising Risk of High-Level Oscillation: Following this week’s strong rally, resistance from the demand side intensified. The market is likely to shift from a “unilateral upward trend” to high-level fluctuation with mild partial corrections.

V. Core Conclusion

The LNG price rally this week resulted from the combined effects of tight domestic cost and supply conditions and international geopolitical tensions and import shortages, representing a trend-driven upward movement under strong support. Although prices will remain underpinned at high levels in the short term, vulnerability in the downstream sector has emerged, limiting room for further sharp gains. High-level competition and stabilizing fluctuations will dominate the next stage.