SunSirs: Energy, LNG prices plummeted 7.18% in Seven days

1. Price Trend

In December, the frantic rise in LNG prices came to an end and prices continued to fall. According to the data of SunSirs, the average price of LNG on December 5 was 4,956.67 RMB/ton, and the average price of December 12 was 4,266.67 RMB/ton. It fell 7.18% in seven days, and rose 22.89% compared with the same period last year. On December 12, the LNG commodity index was 105.16, a decrease of 0.17 points from the previous day, and a decrease of 49.67% from the highest point of the cycle at 208.96 points (2017-12-25), an increase from the lowest point of 68.85 points on October 07, 2019. 52.74%. (Note: Period refers to 2012-09-01 to present)

1. Analysis of Influencing Factors

Products: According to the monitoring of SunSirs, as of December 12, the LNG price of Inner Mongolia Erdos Xingxing Energy Co., Ltd. was 4,300 RMB/ton, and that of Inner Mongolia Etok Qianqi Shitai Natural Gas Co., Ltd. was 4,200 RMB/ton. The LNG price of Xinjiang Qinghua Energy Group Co., Ltd. was 4,300 RMB/ton, that of Zizhou LNG plant of Shaanxi Lvyuan Natural Gas Co., Ltd. was 4,400 RMB/ton, that of Xinjiang Guanghui naomao Lake (east of Lanzhou) was 3,270 RMB/ton, that of Shanxi Qinshui Xinao was 4,350 RMB/ton, and that of Shaanxi Zhongyuan lvneng Natural Gas Co., Ltd. was 4,300 RMB/ton. The LNG price of Dazhou Huixin Energy Co., Ltd. was 40,50 RMB/ ton, and the price of LNG varied from place to place.

Market analysis: Since the Sino-Russian East Line LNG pipeline was officially put into production and ventilated, and the LNG factory began to reduce prices on a large scale, LNG prices have been declining all the way, as of December 12, the decline has reached 7.18%. In recent days, there were rain, snow and fog in many places in the north, LNG shipments were blocked, tanker trucks were not transported smoothly, some LNG factories had higher inventory, and some regional shipments decreased, and LNG prices continued to fall. Due to the emergency response to air pollution in many places, the LNG industrial gas consumption in some regions has been affected, and there is currently no large-scale replenishment demand downstream, pipeline gas is relatively abundant, and liquid plant sales are still under pressure. As the haze dissipated, the road gradually resumed unblocked, LNG factory shipments improved to a certain extent, some manufacturers tentatively rose the price, and LNG fluctuated, forming a pattern of northeast rise and northwest decline. The price of imported LNG is relatively stable and the supply is sufficient.

Due to the oversupply of the LNG market that it is difficult to change in the short term, and the downstream demand is general, LNG has risen weakly without obvious positive support. Moreover, the problem of severely polluted weather still exists, emergency response to air pollution in many places continues, and it is difficult to significantly improve domestic demand, and the trend in many places is still weak. However, with the forthcoming new round of bidding for PetroChina raw materials gas, it may inject a slight turn for the LNG market.

In terms of news: According to data released by the General Administration of Customs, on December 8, China imported 9.455 million tons of LNG in November 2019, an increase of 2.931 million tons, an increase of 44.9%; an increase of 301,000 tons, an increase of 3.3%. LNG imports in November were US $4.03 billion, an increase of US $1.27 billion, an increase of 46.0%; a year-on-year decrease of US $330 million, a decrease of 7.6%. According to this calculation, the average price of LNG imports in China in November was US $425.7 /ton, an increase of US $2.5 /ton from the previous month, an increase of 0.6%; and a year-on-year decrease of US$ 50.3 /ton, a decrease of 10.6%. From January to November, China imported 87.113 million tons of LNG, a year-on-year increase of 7.4%. Cumulative imports were $37.84 billion, a year-on-year increase of 11.8%. According to this calculation, the average price of LNG imports in China from January to November was $434.4 /ton.

Industry: According to the price monitoring of SunSirs, on December 12, 2019, there were two kinds of commodities in the energy sector that rose in the energy price list. The top 2 commodities were petroleum coke (0.74%) and dimethyl ether (0.22%). There were five kinds of products that were down from the previous month. The top 3 products were MTBE (-0.85%), naphtha (-0.53%), and diesel (-0.49%). The average daily increase or decrease was -0.09%.

1. Market Forecast

SunSirs’ LNG analysts believe that, at present, environmental protection is tightening, Hebei has initiated a heavy pollution weather level II response, LNG demand has been suppressed, the LNG plant has been under pressure to reduce prices, profits have decreased, and the trend is weak in the short term. With the arrival of a new round of bidding for PetroChina raw materials on the December 13, LNG prices may stop falling and rise, but there may be limited gains.

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