China’s LNG prices showed an N-shaped trend in Q1, 2025. The
prices will rise after leveling off in Q2.
Market review:
LNG prices presented an N-shaped trend in Q1, 2025. LNG ex-works
prices stood at RMB 4,357.47/mt in Q1, 2025, down 3.99% QOQ and down 2.66% YOY.
The average price level has been relatively low over the past five years.
LNG supply at inland liquefaction plants and coastal terminals grew
in Q1, 2025. LNG supply totaled 9.18 MMt, up 6.04% YOY. LNG supply at inland liquefaction
plants was 6.11 MMt, up 13.49% YOY due to more feedgas availability and start-ups
of many liquefaction plants.
LNG supply at terminals registered at 3.07 MMt, down 6.21% YOY. On
one hand, the curtailment in terminal truck loading came after declines in shipment
due to warm winter, high inventory as well as rerouting of FOB cargoes. On the
other hand, high cost and low sales prices subdued the sales activity of
terminals. The average margin of terminals in Q1, 2025 was RMB -791.48/mt, down
RMB 145.67/mt QOQ and RMB 1,835.16/mt YOY. As for demand, LNG demand was in a peak
season in Q1. LNG consumption volume stood at 9.18 MMt, down 15.83 QOQ while up
6.04% YOY. During January and February, city gas demand was the main contributor
to LNG demand. In addition, relatively low LNG prices boosted demand somewhat. However,
the warm winter subdued the incremental volume somewhat. After the Lantern
Festival, the recovery of industrial and transport users had been slow.
Market forecast:
In Q2, China’s LNG market may first stay stable and then head up,
with prices at RMB 4,350-4,800/mt.
April: LNG prices may hold stable, taking cues from the stable
supply, slipping demand and firm costs. As for supply, LNG supply may be steady,
due to 6.65 mcm/d capacity maintenance, 11.45 mcm/d new capacity and curtailment
in terminal truck loading due to limited shipments. As for demand, LNG demand
will wane, due to the end of winter heating season. In addition, high spot LNG
prices may help underpin the market.
May-June: LNG prices will likely head up due to more LNG plants under
maintenance and rising demand for summer cooling in southern China. As for
supply, about 4.05 mcm/d capacity will enter annual maintenance, much higher
than the 1.8 mcm/d newly added capacity. As for demand, LNG demand will pick
up, while the increase will be limited. LNG demand from gas power may be
elevated in line with higher temperatures in southern regions. However, the demand
from industrial users will be weak amid the maintenance season. Moreover, the
May Day holiday and Dragon Boat Festival will affect LNG demand from LNG vehicles.
