Domestic LNG Market Analysis (Jun 1 – Jun 5, 2026)
Domestic LNG prices trended upward with fluctuations during the period. Essentially, firm cost support and tightening supply drove prices higher, while sluggish demand in the off-season capped gains, creating a tug-of-war where prices faced upward momentum but failed to rally sharply.
1. Price Performance (Jun 8 – Jun 12)
The average ex-plant price of domestically produced LNG stood at 6,000–6,150 RMB per tonne, up 2%–4% week on week.
Prices saw notable hikes in Shaanxi, Ningxia and Inner Mongolia, while Hebei posted a mild decline. Overall, the market moved up modestly amid volatility.
2. Core Driving Factors: Upward Pressures from Tightening Supply
2.1 Sustained high feedgas cost (primary support)
The average bidding price of upstream feedgas reached 3.795 RMB per cubic meter in the first half of June, translating to an LNG production cost of roughly 6,000 RMB per tonne — nearly on par with or even exceeding current ex-plant prices, leaving liquefaction plants exposed to losses.
Daily supply of PetroChina’s bid-in gas has halved, dropping from 23 million cubic meters in January to 11.2 million cubic meters after March. Faced with tight gas supply and elevated procurement costs, plants were strongly inclined to hold firm on quotations and reluctant to sell at discounted prices.
2.2 Plant maintenance and voluntary production cuts
Routine maintenance was carried out at multiple LNG plants in North and Northwest China in June, dragging down capacity utilization. Domestic LNG output fell by 5%–8% month on month.
To mitigate losses from expensive feedgas, some plants cut operating rates from around 70% to roughly 50%, further tightening spot supply.
2.3 High landed cost and slow sales of imported LNG
International LNG prices remained elevated amid constrained production in Qatar (capacity only 50% restored) and industrial strikes in Australia. The JKM spot price lingered at 18–19 USD/MMBtu, with the landed cost of imported LNG hitting 6,200–6,500 RMB per tonne, higher than that of domestic LNG.
Due to high costs, truck deliveries from coastal receiving terminals declined. Ex-terminal prices edged up in some regions, yet imported LNG exerted limited impact on inland markets.
3. Key Constraints: Downside Pressure from Weak Demand
3.1 Sluggish industrial demand in traditional off-season
Operating rates of downstream sectors including chemical, ceramic and glass industries declined in summer, with cheaper coal and oil serving as substitutes. Industrial direct-supply demand dropped 10%–15% year on year.
Residential gas consumption stayed stable. Urban gas suppliers adopted a hand-to-mouth purchasing strategy with low inventory levels and showed little willingness to restock amid high prices.
3.2 Muted demand for vehicle fuel
Weak road freight activity reduced refueling volume of LNG-powered heavy trucks. LNG lost its economic advantage against diesel, dragging down vehicle gas demand.
3.3 Weak purchasing appetite amid high prices
Although liquefaction plants kept prices steady, downstream buyers resisted high quotations and were unwilling to chase price hikes. Transactions were mainly limited to rigid demand, resulting in thin trading whenever prices rose and curbing further gains.
4. Market Overview: Supply-Demand Game
Bullish side (liquefaction plants): High costs, tight supply and firm pricing intentions pushed for price increases.
Bearish side (downstream buyers): Off-season conditions, feeble demand and limited purchasing power capped price rises.
Conclusion: Prices moved up in fluctuations with limited gains, forming a market pattern featured by a cost-driven price floor and demand-restrained price ceiling.
5. Short-term Outlook (Mid-to-late June)
Upside drivers: Feedgas costs are unlikely to retreat, plant maintenance will continue, and international LNG prices will stay high. Prices are poised for a stronger upside than downside.
Downside risks: Off-season demand will remain sluggish, and high prices will continue to dampen trading activity. A sharp rally is improbable.
Market forecast: The average ex-plant price of domestic LNG will fluctuate within the range of 6,000–6,400 RMB per tonne with mild upward momentum. A decisive break above 6,500 RMB per tonne will require stronger demand, such as increased gas-fired power generation driven by sustained high temperatures.