SunSirs: Energy, LPG Fell continuously, with the Price below 3000 RMB/ ton (April 20-26)

LNG prices continued to fall in the second half of April. According to the data monitoring of SunSirs, the average price of LNG on April 27 was 2,953.33 RMB/ ton, 8.47% lower than that on April 16, and 13.14% lower than that of the same period last year. On April 27, the LNG commodity index was 72.79, unchanged from the previous day, down 65.17% from 208.96 (2017-12-25), the highest point in the cycle, and up 5.72% from 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 April 27, the LNG price of Inner Mongolia Erdos Xingxing Energy Co., Ltd. was 2,970 yuan / ton, Inner Mongolia Etoke Qianqi Shitai LNG was 2,920 RMB/ ton, Xinjiang Guanghui Naomao Lake (east of Lanzhou) was about 2,850 RMB/ ton, Shanxi Qinshui Xinao LNG price was 3,050 RMB/ ton, Shaanxi Zhongyuan Green Energy Co., Ltd LNG price was 2,970 RMB/ ton, that of Dazhou Huixin Energy Co., Ltd. was 3,300 RMB/ ton, and that of Xinjiang Qinghua is 3,900 RMB/ ton.

Market Analysis: LNG market in the second half of April was not good, and the price continued to fall. Recently, the international oil price has been falling, even negative, which has an impact on the long-term agreement price of LNG import, and there is a risk of further decline in imported gas. The imported sea gas is of high quality and low price, which impacts the domestic LNG market that it is in the off-season. The downstream demand is general, the inventory of LNG plants is on the high side, and the sales pressure is high. As well as the May Day holiday is approaching, dangerous chemical vehicles on the expressway will be restricted. Most manufacturers continue to reduce their prices to seek benefits. The domestic LNG price is subject to multiple pressures and the price drops frequently. At present, most LNG prices in the north are below 3000 RMB/ ton, hovering on the cost line and the profits of LNG plants are shrinking. Yesterday’s decline was suspended, but there is still a risk of falling LNG in the future. Many negative factors such as consumption off-season, intake shock, and sufficient market supply add up, and LNG price may not rise significantly in a short period of time.

News: in March, natural gas production reached 16.9 billion m³, up 11.2% year on year, with an average daily output of 540 million m³. In the first quarter of 2020, 48.3 billion m³of natural gas were produced, up 9.1% year on year; 6.92 million tons of imported natural gas, down 0.2% year on year. In the first quarter of 2020, 24.66 million tons of natural gas was imported, up 1.8% year on year. China imported 4.19 million tons of LNG in March, up 4.3% year on year, and 2.73 million tons of natural gas in March, down 5.3% year on year.

Industry: according to the price monitoring of SunSirs, in the 16th week of 2020 (4.20-4.24), there was one kind of commodity in the list of commodity price rise and fall in the energy sector, with diesel rising (0.67%). There were 11 kinds of commodities falling on a month on month basis, 4 kinds of commodities falling by more than 5%, accounting for 25% of the number of commodities monitored in the sector; the top three products falling were WTI crude oil (-34.08%), Brent crude oil (-11.72%), and DME (-7.75%). This week's average was -4.6%.

Market Forecast

According to the LNG analyst of SunSirs, at present, the downstream enthusiasm for buying goods is not high in the off-season, the market digestion capacity is weakened, and the domestic LNG market continues to decline due to the impact of intake and other factors. Now, the price is below 3000 RMB/ ton, Hovering near the cost line, it is expected that the LNG market will be weak in the short term with no goog news, so there is still a possibility of decline.

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