SunSirs: Energy, LNG Rebounded after Rising for Several Days

Price Trend

According to data monitoring of SunSirs, the average price of LNG on March 19 was 3,190 RMB/ ton, down 0.1% compared with the previous day and 19.92% compared with the same period last year. On March 19, the LNG commodity index was 78.63, down 0.08 points from the previous day, 62.37% from 208.96 (2017-12-25), the highest point in the cycle, and 14.20% higher than 68.85, the lowest point on October 7, 2019. (Note: cycle refers to 2012-09-01 to now)

Analysis of Influencing Factors

Products: as of March 19, the LNG price of Inner Mongolia Erdos Xingxing Energy Co., Ltd. was 3,200RMB/ton, and that of Inner Mongolia Etok QianqiShitai Natural Gas Co., Ltd. was 3,170RMB/ton. The LNG price of Zizhou LNG plant of Shaanxi Lvyuan Natural Gas Co., Ltd. was 3,220 RMB/ton, that of Xinjiang Guanghuinaomao Lake (east of Lanzhou) was 2,800 RMB/ton, that of Shanxi QinshuiXinao was 3,300 RMB/ton, and that of Shaanxi Zhongyuan lvneng Natural Gas Co., Ltd. was 3,200 RMB/ton, that of Dazhou Huixin Energy Co., Ltd. was 3,650 RMB/ ton.

Market analysis: after a few days of continuous increase in domestic LNG, the general situation of multiple shipments, slightly loose market supply, today's LNG price slightly callback. Since March 15, heating has been stopped in many places in the north China, urban pipeline gas supply has been decreasing, and demand growth has slowed down, while LNG manufacturers' operating rate has increased, the situation of market supply exceeding demand is still the same, and the rise of LNG price lacks practical support, so it began to callback. In addition, the continuous reduction of imported LNG and the formation of competition with domestic gas market have also restrained the rise of domestic gas price. Recently, the collapse of international oil price has driven the LNG market downward. LNG users may turn to choose LPG which can replace LNG, and then divide part of LNG demand. Even though the gas station's gas consumption increases with the recovery of logistics and the factory's resumption of work, the growth rate of demand side is lower than that of supply side, and the contradiction still exists. In the absence of obvious positive situation, LNG in the future still has the risk of falling.

News: according to preliminary statistics, the total supply of natural gas in February was 23.51 billion m³(excluding gas storage). From January to February 2020, the national natural gas consumption decreased by 3.3% compared with the same period last year, the first negative growth in the traditional peak season of natural gas in recent years. China's Manufacturing Purchasing Managers Index (PMI) fell sharply to 35.7% in February, the lowest level since the PMI survey. Since March, with the recovery of production and work and the increase of demand, domestic LNG has continued to rise, and the market supply is still abundant.

Industry: according to the price monitoring of SunSirs, on March 19, 2020, in the list of commodity prices, there was one kind of commodity in the energy sector that rose month on month, and the rising one was DME (0.26%). There were 14 kinds of commodities falling on a month on month basis, with 6 kinds of commodities falling by more than 5%, accounting for 37.5% of the number of commodities monitored in the sector; the top three products falling were WTI crude oil (-24.42%), Brent crude oil (-12.23%) and LPG (-10.33%). The average price of this day was -4.83%.

Market Forecast

According to LNG analyst of SunSirs: at present, most of the LNG plants start up and resume production, but the heating period in many places is ending, the demand for external mining of urban gas is decreasing, the recovery of end users is slow, the demand is less than expected, and the contradiction between supply and demand becomes normal. It is expected that the LNG market will weaken in the short term and continue to be cautious in callback.

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