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SunSirs: Liquid Natural Gas (LNG) Market Plummeted after Surging 70% in October

November 08 2019 17:46:51     SunSirs (Selena)

  1. Price Trend

In October, the domestic LNG market ushered in a sustained surge, and at the end of the month, the LNG market experienced the biggest one-day surge. According to the data monitoring of SunSirs, the average price of LNG on October 1 was 2,793.33 RMB/ ton, and the average price on October 31 was 4,750 RMB/ ton. In the month, the price rose nearly 2000 RMB, or 70.05%, which was crazy. As of November 7, the average price of LNG was 4,126.67 RMB/ ton, down 13.12% compared with the average price of 4,750 RMB/ ton on November 1, and down 5.3% compared with the same period last year. It can be said that the price of LNG was going up crazily and down sharply.

  1. Analysis of Influencing Factors

Product: according to the data monitoring of SunSirs, as of November 7, the LNG price of Inner Mongolia Erdos Xingxing Energy Co., Ltd. was 4,100 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 4,000 RMB/ton, that of Zizhou LNG plant of Shaanxi Lvyuan Natural Gas Co., Ltd. was 4,100 RMB/ton, that of Xinjiang Guanghui naomao Lake (east of Lanzhou) was 2,950 RMB/ton, that of Shanxi Qinshui Xinao was 4,150 RMB/ton, and that of Shaanxi Zhongyuan lvneng Natural Gas Co., Ltd. was 4,080 RMB/ton. The LNG price of Dazhou Huixin Energy Co., Ltd. WAS 3800 RMB/ ton, and the price of LNG in various regions has dropped sharply.

Market analysis: in October, the domestic LNG market began to improve. After the National Day holiday, the road transportation recovered smoothly, the downstream began to actively replenish goods, the terminal demand increased. In addition, the weather turned cold, the northern cities gradually entered the winter heating period, the urban gas procurement LNG supply, the LNG sales were hot, some liquid plants due to the low liquid level in the early stage and heating Quarter expectations, strong price push. On October 15, CNPC conventional liquid plant bidding for raw material gas, starting at 1.41 RMB/ m3, gas volume 180 million m3. The rising gas source, a slight reduction in the overall market supply, as well as the intentional increase in logistics freight, also support the upward momentum of LNG. Since then, in the middle and last ten days of October, LNG has maintained the trend of shock and stability, with different ups and downs, but the market as a whole has remained stable. This state of stability was broken at the end of the month. On October 30, the starting base price of Northwest raw material gas auction was raised to 1.57 RMB/ m3, and the final transaction price was 2.6-2.75 RMB/ m3. The volume of registered orders in the auction was 100 million m3, 80 million m3 less than that of the last time. Driven by the rising cost, the domestic LNG price rose sharply, which rose nearly 1000 RMB overnight, with multiple terminals linked and rising, as well as the receiving stations around the country. The scope of this surge is almost national and large-scale. It is also a large one-day increase in recent years, and the market as a whole is "rising".

However, such a rise did not last for a long time. Since November 2, there have been successive declines everywhere, and there are many secondary price adjustments in a day. At present, some manufacturers need to buy high price gas source to maintain the power on, and some manufacturers need to wait and see. The sudden surge at the end of October was unexpected. In addition to the cost increase, there are also market sentiment driven factors. Currently, there is no obvious positive support for the terminal, and LNG short-term price surge lacks practical support.

According to the National Bureau of statistics, in the first three quarters of this year, China produced 127.7 billion cubic meters of natural gas, a year-on-year increase of 9.5%. In September, China produced 13.5 billion cubic meters of natural gas, a year-on-year increase of 10.6%, an increase of 4 percentage points over the previous month.

Industry: according to the price monitoring of SunSirs, there were two kinds of commodities in the rise and fall list of bulk commodity prices in October 2019, one of which rising more than 5%, accounting for 6.3% of the number of commodities monitored in the sector; the top two commodities are LNG (70.05%) and LPG (1.51%) There were 14 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 this sector; the top three products falling were MTBE (- 15.83%), gasoline (- 11.62%), methanol (- 5.89%) This month, the average rise and fall was 0.44%.

  1. Market Forecast

LNG analysts of SunSirs believe: in recent days, LNG has been declining one after another, the pressure of middlemen's sales is too high, some middlemen's profits have been inverted, and their mentality is relatively negative. Considering the problem of loss, the decline of local liquid price slowed down. With the decrease of temperature and the approaching of central heating in the north, the demand for heating will increase, and the demand for LNG will be boosted. At that time, the market situation of LNG will change, and there is no lack of expectation for rise.


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