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Since February, domestic liquefied natural gas (LNG) has seen a series of consecutive price increases. By early March, the average price of LNG rose to 4,859 yuan per ton, representing a 9.9% increase on a month-on-month basis. However, due to negative factors such as an increase in supply and a decrease in demand, as well as expectations of a slow trading season, the LNG market began to decline. By March 24, the average price of LNG in China had dropped to 4,694 yuan, a decrease of 3.4%, indicating a clear trend toward consolidation. “In February, driven by reduced production at some liquefaction plants, a slow recovery in demand, and strong upward pressure from sea temperatures, domestic LNG transaction prices continued to rise. However, with the end of centralized heating in the north in March, there was an ample supply of natural gas, reducing the need for LNG to cover peak demand; as a result, supply and demand gradually reached balance, and the market began to return to a rational state. As the off-season for demand arrives in May and June, declining consumption expectations will have a negative impact on future market trends; it is expected that the LNG market will enter a critical period of consolidation in April. ”Meng Jianjie, manager of the gas marketing department at Zhengzhou Dayou, analyzed. Increased supply and reduced demand drive adjustments. According to data from Longzhong Information, in March, the actual production volume of 268 LNG plants in China during the third week was 790.93 million cubic meters, an increase of 75.34 million cubic meters compared to the beginning of the month, representing a growth rate of 10.5%. On the demand side, overall LNG demand declined in March as the heating season came to an end and the concentrated stock replenishment by some companies in February slowed down. Meng Jianjie said that apart from an increase in supply, another major reason for the decline in domestic LNG prices at the beginning of March was a sharp drop in demand. In the first week of March, the total domestic demand for LNG was 762,900 tons, a decrease of 55,400 tons on a month-on-month basis, representing a decline of 6.77%. This was one of the main reasons for the significant downturn in the domestic LNG market that month. As demand began to recover steadily in the second and third weeks of March, by the end of the third week the total domestic demand for LNG had risen to 819,600 tons, returning to the level seen at the end of February. The gap between supply and demand is gradually narrowing, and the pace of price decline is also slowing down, marking the onset of a period of consolidation in the LNG market. Strong support at higher levels in the external market. According to market analysts, the Russia-Ukraine conflict remains one of the key factors influencing price fluctuations in European natural gas markets. Coupled with the high demand in Northeast Asia, this has helped keep transaction prices in Asia’s LNG market at relatively high levels. Although international LNG prices declined after mid-February, they began to stabilize and rise again in March due to the uncertainty in the international situation. According to statistics, the prices of the S&P Korea-Japan Benchmark Index (JKM) from January to March were higher than the domestic average price, providing strong support for the domestic market. In addition, affected by U.S. tariff policies, China imposed additional tariffs of 15% on goods imported from the United States starting on February 10; this had an impact on natural gas imports from the U.S., with American natural gas suppliers not receiving any orders from China for nearly 40 days in a row. Changes in the structure of the international energy market have an impact on the domestic natural gas market. Given the current market dynamics characterized by competing forces, fluctuations and consolidation in the LNG market are inevitable in the short term. Rebalancing of supply and demand dynamics Senior market commentator Shao Huiwen states that the main factors influencing the natural gas market at present are threefold: first, domestic supply capacity, which includes the operating levels of existing production facilities and current stock levels. As of March 20, the total inventory of domestic LNG plants was 533,000 tons, showing a steady decline compared to the beginning of the month. In the third week of March, the average effective capacity utilization rate for domestic natural gas was 62.28%, an increase of about 6% compared to the beginning of the month; thus, the supply of LNG in the market was generally sufficient. The second is the recovery of demand. Starting from mid-to-late March, market transaction prices stabilized; traders actively purchased goods at lower prices, and downstream gas stations planned to make purchases for stockpiling, leading to an increasing demand for LNG. Third is the uncertainty in international markets. On March 24, no significant progress was made in the negotiations regarding the Russia-Ukraine conflict, which further increased the risk of supply disruptions in the international natural gas market. Based on supply and demand analysis, influenced by various positive and negative factors, the gap between LNG supply and demand is gradually narrowing. Furthermore, in late March, the main production areas in the northwest of the country will see a continued tight supply situation due to maintenance work at some factories, which will drive up prices in these areas; as a result, a new balance between market supply and demand may be established. Industry experts believe that, given the current international and domestic macroeconomic conditions as well as market volume and prices, the supply-demand dynamics for LNG will continue in the short term. Against the backdrop of a supply-side advantage, coupled with industry expectations of reduced demand during the off-season in May and June, a narrow range of movement in the LNG market is likely to be the norm in the near term, with April likely to be a key turning point.