I. December 2025 LNG Market: Supply-Demand Imbalance Drives Prices Downward

In December 2025, domestic LNG prices struggled to stabilize, primarily due to severe supply-demand imbalance. While pipeline gas supply remained ample, the lack of significant temperature drops failed to boost LNG consumption. As LPG plant inventories piled up, producers had no choice but to cut prices to offload stock.

Compounding the issue, falling international spot LNG prices further eroded receiving terminal margins. PetroChina intensified its sales, flooding the market with low-cost resources that directly impacted neighboring regions, further exacerbating the domestic price decline.

Key price metrics: The national average ex-factory LNG price in December was ¥4,063/ton, down 6.1% from November—a decrease of ¥263/ton—and 9.8% lower than the same period last year.

The breakdown reveals sharper declines: - Domestic LNG ex-factory average: ¥3,968/ton, down 7.4% month-on-month (¥319/ton drop), down 11.3% year-on-year; - Imported LNG tanker batch average: ¥4,158/ton, down 4.7% month-on-month (¥207/ton drop), down 8.4% year-on-year.

(I) LNG Plant Side: Excess Supply, Weak Demand, Overstocked Warehouses Force Discounted Sales

On the supply side, pipeline gas flows remain ample, CNPC increases feedstock gas allocations, and new production capacity continues to come online—directly causing resource oversupply. On the demand side, even with temporary cold snaps, downstream buyers only purchase gas for essential needs, waiting for low prices to buy.

As inventories swelled, plants had no choice but to launch successive rounds of price cuts to clear stockpiles, driving domestic LNG prices steadily downward.

(2) Terminal Side: Unsustainable Costs + Industry-Wide Price Wars Force Downward Pressure

Early in the month, low-priced domestic LNG disrupted the entire market. Many terminals slashed prices to maintain sales volume.

By mid-to-late December, the supply-demand imbalance remained unresolved, while international spot LNG costs continued to fall, further weakening receiving terminals' cost support. With CNPC's receiving terminals facing a surge in vessel arrivals, they resorted to price cuts to capture market share, driving LNG prices at receiving terminals down step by step.

II. January 2026 LNG Forecast: Prices Unlikely to Surge, Weak Volatility Predominant

Considering supply, demand, and costs, domestic LNG prices in January 2026 are unlikely to improve, with weak volatility prevailing.

(1) Supply Side: Total Volume Slightly Down, Pressure Eases Compared to December

Total domestic LNG liquid supply in January is projected at approximately 6.02 billion cubic meters, averaging 194 million cubic meters daily—a 3.06% decrease from December's daily average.

Liquefaction Plant Supply: While pipeline gas supply remains adequate in January, CNPC's raw gas auction volumes are lower than in December. Combined with weak demand, liquefaction plants show limited production enthusiasm. Total national LNG output is projected at 4.19 billion cubic meters, averaging 135 million cubic meters daily—a 2.56% daily decrease month-on-month.

Imported LNG Supply: January's LNG import shipments are projected to be over 10 vessels fewer than December. With many receiving terminals no longer facing delivery pressures, prices may see a slight downward adjustment. Total imported LNG volume is estimated at 1.83 billion cubic meters, averaging 59 million cubic meters daily—a 4.19% decrease from the previous month's daily average.

(II) Demand Side: Industrial Shutdowns to Weigh on Consumption

Temperature-wise, only northern Northeast China, eastern and western Inner Mongolia, northeastern Northwest China, and northern Xinjiang will see temperatures 1-2°C lower than the historical average for this time of year. Other regions will either match historical levels or even see slightly higher temperatures.

Even in colder pockets, heating and vehicle LNG demand won't see significant growth. More critically, with the Lunar New Year approaching, many industrial plants will shut down early in mid-to-late January, causing industrial gas demand to shrink directly. Overall, January LNG consumption will definitely be lower than December's.

(III) Cost Side: Import Costs Rise Slightly, Domestic Costs Fall Sharply, Leading to Complete Cost Divergence

Imported LNG Costs: The January 2025 Northeast Asia spot LNG price is approximately $11.66/MMBtu. Converted to RMB inclusive of taxes and terminal fees, this equates to roughly 5,178 RMB/ton—a 207 RMB/ton increase from December 2025’s 4,971 RMB/ton. Terminal costs have finally gained some support.

Domestic LNG Costs: CNPC's auction price for feedstock gas supplied to western and northern liquefaction plants in the first half of January ranged from 1.90-1.93 RMB/m³, with a weighted average of 1.910 RMB/m³. This translates to a production cost of just 3,465 RMB/ton for liquefaction plants—a substantial drop of 429 RMB/ton compared to December, further weakening cost support for domestic gas.

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