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SunSirs: ‘Small Rise and Big Fall’ of China LNG Market in August

September 04 2020 14:11:30     SunSirs (Selena)

According to the data of SunSirs, the average price of domestic LNG was 2,430 RMB/ ton on August 31, down 1.35% from the beginning of the month, 18.27% compared with the same period last year, and the maximum amplitude of last month was 3.88%.

Analysis of Influencing Factors

In August, China domestic LNG market as a whole went down, rising slightly and falling sharply. The LNG price rose slightly in the first ten days, and then continued to fall, and then rose slightly in the last ten days, but it only lasted for a few days and then fell, falling by 1.35% in the whole month. On the whole, in August, although the domestic LNG was actively looking for the potential and rising, the off-season constraints did not subside, and the liquid price rise space was limited, so the rise was less than the decline, and the market was still weak.

On the supply side, the overall operating rate in August was around 60%, which slightly increased near the end of the month. The arrival date of this month is relatively dense, which has decreased compared with the previous period, but the market supply is still abundant.

On the demand side, there was little change in the demand side in August, which was still in the off-season consumption. The demand for gas stations was stable. In addition, the rainy weather in some areas made the demand for vehicles not high. Near the end of the month, the downstream demand was slightly improved, and the sales volume of gas stations increased, which provided support for the rise of liquid price. However, the industrial gas consumption was not obvious. As the price of pipeline gas was significantly lower than that of LNG, part of the demand was scattered. Overall, the downstream demand was stable and there were signs of recovery, but supply still exceeds demand.

According to the NDRC, the apparent consumption of natural gas in July was 24.63 billion cubic meters, an increase of 0.6% year-on-year. Natural gas production was 14.3 billion cubic meters, up 3.2% year on year. According to customs statistics, in July, the import volume of natural gas was 10.14 billion cubic meters, down 6.4% year on year. From January to July, the apparent consumption of natural gas was 180.24 billion cubic meters, a year-on-year increase of 3.3%. Natural gas production was 109.25 billion cubic meters, up 9% year on year. According to customs statistics, from January to July, the import volume of natural gas was 76.88 billion cubic meters, a year-on-year increase of 2%.

According to the data monitoring of SunSirs, as of September 2, the average price of domestic LNG was 2,430 RMB/ ton, the price in Inner Mongolia was mostly 2,350-2,400 RMB/ ton, that in Shaanxi was 2,490 RMB/ ton, that in Shanxi was 2,600 RMB/ ton, that in Xinjiang was 2,300 RMB/ ton, and that in Ningxia was 2,370 RMB/ ton.

Market Forecast

SunSirs LNG analysts believe that China domestic LNG market as a whole went down in August, rising slightly and falling sharply. Although maintenance is good to boost, but the overall market supply is abundant, demand follow-up is general. In September, the downstream demand is expected to turn better. In addition, the continuous rising of intake gas will boost the atmosphere of domestic LNG market. In the short term, China LNG price will still fluctuate in a narrow range, and the future market will be better.

 

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