From April 1 to 7, China's comprehensive LNG import CIF price index was 134.76 points

On April 10, China's LNG comprehensive import CIF price index jointly released by the Global Trade Monitoring and Analysis Center of the General Administration of Customs and the Shanghai Petroleum and Natural Gas Trading Center showed that China's LNG comprehensive import CIF index was 134.76 from April 1 to 7, up 3.73% month-on-month and down 4.24% year-on-year.

Last week, U.S. natural gas prices fluctuated widely. On the supply side, total natural gas production in the 48 contiguous states fell to about 100 billion cubic feet per day, down 1.08% year-on-year, according to data released by Baker Hughes on Friday, the latest weekly active natural gas rig count was 110, down 2 from the previous week and 48 from the same period last year. On the demand side, total consumption fell month-on-week and was basically flat from the same level last year, down 1.38% year-on-year, as temperatures in many states in the U.S. have been relatively stable recently, domestic residential/commercial gas consumption in the U.S. has been significantly reduced, and gas consumption for power generation has remained stable due to relatively stable temperatures in many states recently The efficient and stable operation of Pass and other liquefaction export terminals has enabled the U.S. to stabilize LNG processing at more than 12 billion cubic feet per day. In terms of inventory, according to relatively lagging data released by the U.S. Energy Information Administration (EIA) last Thursday, weekly inventories fell by 37 billion cubic feet, less than the market expectation of 42 billion cubic feet, and compared with the average of the same period in the past five years, inventories increased by 38.93%, and the fundamentals are very loose. In terms of weather, according to the weather forecast of the National Oceanic and Atmospheric Administration (NOAA) last week, the temperature in most of the 48 states in the contiguous United States will rise in the next 1-2 weeks, and the demand for refrigeration is expected to gradually increase. Throughout the week, although the initial increase in the flow of the Freeport LNG export plant in Texas, pipeline maintenance led to the state's natural gas detention and producers reduced drilling after the price drop in February, resulting in a continuous decline in U.S. natural gas production, while the dollar index continued to decline during the week, but demand has not been significantly boosted, natural gas exports have been stable and declining during the week, while the inventory decline is less than market expectations, and the U.S. natural gas prices have fluctuated under the combination of long and short. As of Friday, the main NYMEX natural gas contract settled at $1.785 per MMBtu, up 1.25% week-on-week.

In Europe, natural gas prices fluctuated and fell. On the supply side, pipeline gas imports from Europe continued to rise last week from the previous week, with pipeline gas imports from Norway rising slightly, pipeline gas imports from Russia remaining stable, and LNG imports continuing to remain high. On the demand side, consumption in the residential and commercial sectors fell sharply in mainland northwest Europe last week, while consumption in both the industrial and power sectors was weak and continued to decline. In terms of inventory, as EU countries entered the gas injection cycle in April, according to the data of the European Gas Infrastructure Information Platform (GIE), the current overall inventory in Europe is 60.62%, and the total inventory has increased by about 9.27% over the same period last year. According to the weather forecast, in early April, the weather in most parts of northwest Europe is expected to be warm and windy, and the demand for heating gas is at a seasonal low, and the demand for refrigeration has not been significantly boosted. Throughout the week, in the first half of the week, due to the expected continued mild weather, strong winds, and a decline in downstream gas-related demand, coupled with the impact of sufficient and stable supply of pipeline gas and LNG in northwest Europe, the supply and demand pattern tended to be loose, the market performance was weak, and European natural gas futures prices fell; As of last Friday, the main TTF contract settled at 26.606 euros per megawatt hour (about $8.453 per million British thermals), down 2.68% week-on-week.

In Northeast Asia, despite the impact of sanctions and the shortage of LNG carriers, Novatek, Russia's largest LNG producer, has suspended the production of its Arctic 2 project and is expected to close it until at least the end of June, which has provided some support to prices in the Northeast Asian market. However, spot LNG CIF prices in Northeast Asia fell slightly last week as domestic gas inventories and prices above $9/MMBtu limited the purchasing demand of some Chinese and South Korean buyers last week, as the sentiment of Japanese traders on spot-related procurement demand cooled from previous weeks, and as natural gas inventories and prices above $9/MMBtu constrained the purchasing demand of some Chinese and South Korean buyers. According to data released by the China Natural Gas Information Terminal (E-Gas System), about 1.54 million tons of LNG imported from the mainland landed in the last calendar week. According to the monitoring of the trading center, the current turnover of mainland enterprises in the physical market is not large, and the price in the international spot market at this stage does not fully represent the real overall LNG import cost of mainland enterprises. Thanks to a large number of medium and long-term LNG purchase and sales agreements signed by importers, including the three major oil companies, and a large number of imported pipeline gas, the demand for spot LNG imports in the mainland has increased relatively little at this stage, so the international spot price level has little impact on the overall natural gas market in the mainland. As of Tuesday, the CIF price (CLD) of China's imported spot LNG for May was $9.335 per MMBtu assessed by the Shanghai Petroleum and Natural Gas Exchange.

From the perspective of the LNG comprehensive import CIF price index, China's LNG comprehensive import CIF price index was 134.76 points last week, and the index has fluctuated recently. The main reason is that the international crude oil price in the pricing period corresponding to the pricing linkage, which accounts for the vast majority of the import volume, is small. For a small part of the import spot, due to the pricing cycle, the pricing cycle of the spot part of the current CIF price index is mainly around the first week of February, and the spot price fluctuates in a narrow range during this time period. Under the comprehensive influence, the comprehensive import CIF price fluctuation of LNG is small.

The compilation of China's LNG comprehensive import CIF price index was jointly completed by the Global Trade Monitoring and Analysis Center of the General Administration of Customs and the Shanghai Petroleum and Natural Gas Trading Center, which was first published on October 16, 2019 and released in the form of price, and has been adjusted to be released in the form of an index since September 23, 2020, which is based on the first calendar week of 2018 (the consolidated CIF price of China's LNG import in that week was 2,853 yuan/ tonnes, the price index is 100), which comprehensively reflects the price level of LNG imports from mainland China last week. This is a useful exploration of the market-oriented pricing system of natural gas prices in the mainland, which is conducive to cultivating domestic natural gas pricing benchmarks, timely and effective docking between the domestic market and the international market, and further enhancing the influence of the mainland in the international oil and gas market.

Source of this article | Shanghai Petroleum and Natural Gas Trading Center

The author of this article | Chan Ying-ho