Exclusive: China to offer yuan-denominated LNG futures as soon as next month, sources say- ‘China is the single largest purchaser of most commodities yet price discovery happens in other markets’
Exclusive: China to offer yuan-denominated LNG futures as soon as next month, sources say- ‘China is the single largest purchaser of most commodities yet price discovery happens in other markets’
# China to Launch Yuan-Denominated LNG Futures as Soon as Next Month
## Strategic Market Shift
China is set to launch domestically-listed, yuan-denominated liquefied natural gas (LNG) futures contracts as early as February 2026 on the Shanghai Futures Exchange (ShFE), according to sources. This move aims to reduce Chinese importers’ reliance on Western pricing benchmarks when hedging against price volatility.
## The Core Problem
**”China is the single largest purchaser of most commodities yet price discovery happens in other markets,”** a senior global bank executive noted. Despite being the world’s largest LNG importer, China currently relies on foreign pricing benchmarks like:
– Henry Hub (U.S.)
– Title Transfer Facility (Europe)
– Japan-Korea Marker (JKM)
## Strategic Objectives
1. **Reduce Western dependency**: Enable Chinese firms to determine physical contracts without using overseas prices
2. **Energy security**: Manage prices between domestic entities in local currency amid U.S. trade policy uncertainty
3. **Challenge foreign pricing hubs**: Create a benchmark reflecting China’s own demand and supply dynamics
4. **Financial market development**: Enable yuan-denominated LNG-linked loans, repurchase agreements, and asset-backed securities
## Market Context
– Chinese LNG imports forecast to rise 12% to 76.5 million metric tons in 2026
– Global LNG output set to jump this year, easing supply constraints from the Ukraine conflict
– A state gas trader involved in discussions expects “long-term supplies to China…to factor in Shanghai contracts, rather than be heavily benchmarked to Brent oil”
## Broader Implications
The initiative aligns with Morgan Stanley’s assessment that U.S. policies are creating a “multipolar world” and eroding the dollar’s status as the currency of trade. Foreign companies would need to establish China-based trading entities to participate in the yuan-denominated contracts.
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# China to Launch Yuan-Denominated LNG Futures as Soon as Next Month
## Strategic Market Shift
China is set to launch domestically-listed, yuan-denominated liquefied natural gas (LNG) futures contracts as early as February 2026 on the Shanghai Futures Exchange (ShFE), according to sources. This move aims to reduce Chinese importers’ reliance on Western pricing benchmarks when hedging against price volatility.
## The Core Problem
**”China is the single largest purchaser of most commodities yet price discovery happens in other markets,”** a senior global bank executive noted. Despite being the world’s largest LNG importer, China currently relies on foreign pricing benchmarks like:
– Henry Hub (U.S.)
– Title Transfer Facility (Europe)
– Japan-Korea Marker (JKM)
## Strategic Objectives
1. **Reduce Western dependency**: Enable Chinese firms to determine physical contracts without using overseas prices
2. **Energy security**: Manage prices between domestic entities in local currency amid U.S. trade policy uncertainty
3. **Challenge foreign pricing hubs**: Create a benchmark reflecting China’s own demand and supply dynamics
4. **Financial market development**: Enable yuan-denominated LNG-linked loans, repurchase agreements, and asset-backed securities
## Market Context
– Chinese LNG imports forecast to rise 12% to 76.5 million metric tons in 2026
– Global LNG output set to jump this year, easing supply constraints from the Ukraine conflict
– A state gas trader involved in discussions expects “long-term supplies to China…to factor in Shanghai contracts, rather than be heavily benchmarked to Brent oil”
## Broader Implications
The initiative aligns with Morgan Stanley’s assessment that U.S. policies are creating a “multipolar world” and eroding the dollar’s status as the currency of trade. Foreign companies would need to establish China-based trading entities to participate in the yuan-denominated contracts.