CICC: Low inventory amplifies short-term price elasticity; LNG price center may enter an upward cycle.

CICC released a research report stating that global LNG supply will shift to contraction in the first half of 2026, with Asia being the primary demand regulator. In the first half of 2026, global LNG exports totaled 281.2 billion cubic meters, a decrease of about 5.8 billion cubic meters compared to the first half of 2025. The approximately 10 billion cubic meters of incremental supply accumulated in January and February has been absorbed by March to June. In terms of the scale of imports from major importing regions, the Northeast Asia region saw a noticeable reduction in imports, while Europes LNG import levels remained relatively stable. The global LNG market is expected to maintain a tight balance in the short term, and upstream resource companies still hold allocation value. The main viewpoints of CICC are as follows: In the short term, global LNG supply and demand remain tight, and the risk of price fluctuations in winter has significantly increased. In the first half of 2026, global LNG exports decreased year-on-year by about 5.8 billion cubic meters, mainly due to reduced imports in Northeast Asia, while European imports remained stable. The organization estimates that if Qatar's supply gradually recovers from October, global LNG supply may still decrease by about 16 billion cubic meters year-on-year in 2026; if recovery does not occur throughout the year, the expected reduction may expand to 26 billion cubic meters. Considering that China's further reduction in imports is limited and European demand elasticity has significantly declined, coupled with low inventory levels, the organization expects that the autumn JKM may fluctuate between $15 and $25/MMBtu, while the winter average may rise to $25-$35/MMBtu, facing a risk of exceeding $40/MMBtu in extreme cases. The medium-term supply and demand outlook remains favorable, but the price center for LNG may rise compared to the past. If Qatar returns to normal production in 2027, along with the commissioning of U.S. projects under construction, the organization believes that global LNG supply and demand may shift back to a loose state starting from the second half of 2027; if the recovery continues to be delayed, the tight balance may persist until the first half of 2028. In the long term, the organization believes that energy security demands will drive an expansion of North American LNG production, but rising U.S. liquefaction fees and natural gas costs may push the mid-term price center for LNG up from $8-$10/MMBtu to $10-$15/MMBtu. China's short-term demand for natural gas is under pressure, but growth is expected to resume in the later period of the 14th Five-Year Plan. In the first half of 2026, the apparent consumption of natural gas nationwide decreased by 2.4% year-on-year, with high gas prices leading to industrial and power generation gas being replaced by coal and renewable energy. The organization expects that demand will remain weak in 2026-2027. During the 14th Five-Year Plan period, domestic natural gas will see an average annual increment of about 5-6 billion cubic meters, with growth rates slowing compared to the 13th Five-Year Plan; as global LNG supply and demand loosen after 2028 and domestic pricing mechanisms are further improved, China's natural gas demand growth is expected to return to a mid-to-high single-digit level. Additionally, the organization predicts that in the high energy price cycle, alternative energies such as biomass will also gain some structural development opportunities. Risks include significant fluctuations in oil and gas prices, unexpected escalation of geopolitical conflicts, oversupply of newly added LNG production capacity, and domestic natural gas demand recovery falling short of expectations.