The LNG market has peaked and is now experiencing weak fluctuations on a downward trend

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　　Since mid-May, the domestic liquefied natural gas (LNG) market has ended its upward trend that had lasted for over two months, and as a result of the balance between supply and demand forces, it has entered a phase of decline and consolidation. As of May 30, the mainstream domestic LNG pricing had dropped to 5,800–6,000 yuan per ton (the same unit is used below), representing a decline of about 9% from the highs seen in early May, signaling that the market had reached its peak and was now declining. At the same time, affected by the decline in both domestic and imported LNG supplies, the market gradually shifted to a pattern of fluctuating consolidation. 　　Meng Jianjie, manager of the marketing department at Zhengzhou Dayou Gas Co., Ltd., pointed out that considering the current level of participation from upstream and downstream parties as well as the current supply and demand situation in the industry, there is limited room for a significant drop in LNG prices in the short term; it is likely that prices will remain high and stabilize at that level. 　　High prices combined with the off-season have led to a decline in demand in various sectors. Data from Longzhong Information shows that China’s LNG consumption in May was 3.0761 million tons, a 8.70% decrease on a month-on-month basis and a 7.48% decline on an annual basis. Among them, industrial usage and usage at gas stations have seen a significant decline, influenced notably by compressed natural gas resources that offer better prices as well as the replacement of such vehicles with new energy vehicles ； The bulk shipment volume of LNG at the receiving station was 797,300 tons, a 18.37% decrease on a month-on-month basis. Due to high import costs, the receiving station continued to adopt a strategy of limiting sales, which resulted in restricted releases of liquid LNG and further reduced the volume of imported LNG shipped in bulk. 　　Meng Jianjie said that demand for LNG in various sectors was weak in May, and one of the key reasons for this was high prices. When the ex-factory price of LNG remains above 5,900 yuan for an extended period, it becomes less economical compared to pipeline gas; as a result, end-users in the urban heating and industrial sectors switch to pipeline gas, leading to a decline in demand for LNG ； The same is true in the automotive sector: rising gas prices increase the retail prices at gas stations, prompting drivers to use fuel instead, and as a result, sales at gas stations decline. Furthermore, May falls during the traditional off-season for demand, so purchasing volume by downstream buyers naturally declines, further exacerbating price adjustments. 　　Stricter domestic and international supply levels lead to a consolidation of the market bottom. Data shows that in May, the supply from domestic LNG plants was around 2.21 million tons, a 0.63% decrease on a month-on-month basis. The head of a natural gas company in Inner Mongolia explained that the decline in supply was due to two objective factors: first, May to July is the traditional maintenance period for liquid processing plants, and the shutdown of many plants for maintenance led to a reduction in production ； Secondly, the tightening supply of feed gas has dragged down the operating rate of liquid production plants. This also became the reason why some manufacturers raised prices slightly at the end of May due to low inventory levels. 　　The import side also showed a decline; in May, the volume of bulk supplies to LNG receiving stations was approximately 765,300 tons, a 10.64% decrease on a month-on-month basis. Due to high import costs, receiving stations generally adopt a volume-control strategy to reduce shipments and avoid losses. The overall reduction on the supply side led to tighter market resources, which provided support amid declining demand and was a key factor in preventing significant price drops in May. 　　Weak supply and demand continue; volatility with consolidation is the dominant trend. Senior market commentator Shao Huiwen believes that the LNG market has recently seen a situation where supply is tightening while demand remains weak, with prices fluctuating as a result of the balance between cost pressures and demand constraints. Looking at the overall figures for May, Chinese LNG prices saw a certain increase, with an average ex-plant price of around 6,090 yuan, representing a 16.15% rise on a month-on-month basis ； The average outbound price at the receiving station is around 6,477 yuan, representing a 16.53% increase on a month-on-month basis ； The spot import CIF price is around $17.5 per million British thermal units, up 2.1% on a month-on-month basis. This is mainly due to the low price base in April, but in fact the market trend began to weaken in mid-to-late May. At present, manufacturing companies are still seeing decent profits, but distribution companies are under increasing pressure, with prices at refineries and receiving stations showing an overall downward trend. 　　Regarding the market situation in June, Shao Huiwen believes that \"in terms of domestic gas, as the maintenance season has not yet ended, the supply from liquefaction plants is likely to continue to decline\" ； On the import side, although there are signs of easing in the Middle East situation, it will take time for the Strait of Hormuz to resume normal traffic and for Qatar’s LNG facilities to become operational again; therefore, the increase in gas supply will be limited in the short term. Since it is still the off-season for demand, a significant increase in demand is unlikely. Therefore, against the backdrop of simultaneous declines in supply and demand, the LNG market is likely to enter a period of narrow-range consolidation in June, with price fluctuations not showing significant increases. ”　　Industry experts generally believe that the LNG market is likely to remain weak in June, with no significant improvement in demand. However, supported by costs, prices are unlikely to drop sharply, and the market is expected to exhibit a volatile pattern characterized by demand pressures on the upside and cost support on the downside.