From April 15 to 21, China's comprehensive LNG import CIF price index was 138.53 points

On April 24, China's LNG comprehensive import CIF 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 138.53 points from April 15 to 21, up 1.43% month-on-month and 0.04% year-on-year.

Last week, U.S. natural gas prices fluctuated and fell. On the supply side, total natural gas production in the 48 contiguous states fell to below 100 billion cubic feet per day, down 1.97% year-on-year, according to data released by Baker Hughes on Friday, the number of active natural gas rigs in the latest week was 106, down 3 from the previous week and 53 from the same period last year. On the demand side, due to the increase in temperatures in many states in the United States last week, the residential/commercial gas consumption in the United States plummeted, and the gas consumption for power generation increased slightly, making the total consumption continue to decline from the previous week, up 3.31% year-on-year. The Freeport liquefaction export facility saw a sharp decline in gas intake from the previous week, while Corpus Christ's gas intake due to pipeline repairs fell over the same period, causing the national LNG processing volume to fall below 11 billion cubic feet per day, a decrease of about 13.49% from the previous week. In addition, according to shipping data provided by Bloomberg Financial, 21 LNG ships left the U.S. in the week of April 11 to April 17, carrying a total LNG capacity of 79 billion cubic feet. In terms of inventories, according to the relatively lagging data released by the U.S. Energy Information Administration (EIA) last Thursday, weekly inventories increased by 50 billion cubic feet, less than the market expectation of 54 billion cubic feet, and compared with the average of the same period in the past five years, inventories increased by 36.35%, 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 continental United States is expected to rise in the next 1-2 weeks. Throughout the week, last Monday by the flow of natural gas to the free port liquefaction export terminal significantly reduced and far lower than the previous week's weekly average level, HH natural gas futures prices fell sharply; As of last Friday, the main NYMEX natural gas contract settled at $1.988 per MMBtu, down 2.02% week-on-week.

In Europe, natural gas prices fluctuated. On the supply side, pipeline gas imports from Europe fell slightly last week from the previous week, with pipeline gas imports from Norway declining, pipeline gas imports from Russia stabilizing, and LNG imports continuing to remain high. On the demand side, consumption in the residential and commercial sectors continued to rebound sharply in mainland northwestern Europe last week, while consumption in the industrial and power sectors continued to rise. In terms of inventory, according to the data of the European Natural Gas Infrastructure Information Platform (GIE), the current overall inventory in Europe is 62.01%, and the recent injection rate has slowed down, and there has even been a short-term withdrawal of several days, and the current total inventory has increased by about 8.01% over the same period last year. According to the weather forecast, in mid-to-late April, the temperature in most parts of northwest Europe is expected to drop, and the demand for heating gas may be slightly boosted. Throughout the week, although the Nyhamna compressed gas station in Norway was overhauled during the week, the pipeline gas delivery volume was affected to a certain extent, but its maintenance time was short and it quickly resumed normal operation; the situation in the Middle East continued to be tense and the performance during the week, coupled with the fact that the US Freeport was still in a state of failure, and the flow of raw gas was reduced, which caused market concerns about supply tightness; European natural gas demand remained sluggish, and there was a large surplus of natural gas inventories. Under the interweaving of long and short, the price of TTF natural gas futures fluctuated. As of last Friday, the main TTF contract settled at 30.758 euros per megawatt hour (about $9.603 per million British thermals), up only 0.08% week-on-week.

In Northeast Asia, which is also affected by tensions in the Middle East, Iran threatens to close the Strait of Hormuz, and Northeast Asian markets are increasingly concerned about LNG supply disruptions in Qatar and the United Arab Emirates. At the same time, the Freeport LNG export facility in the United States is still under maintenance, and the feed gas flow at the beginning of the week is tightening to zero, and the Nyhamna gas processing plant in Norway is undergoing an unscheduled one-day maintenance, which further exacerbates the supply-side tension. However, at present, the procurement demand of buyers in Northeast Asia is weak, the market trading is relatively thin, and the inventory is high, which suppresses the price upside to a certain extent. Last week, the CIF price of spot LNG in Northeast Asia fluctuated with the price trend of the European market. According to data released by the China Natural Gas Information Terminal (E-Gas System), the mainland's LNG imports landed about 1.67 million tons 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 of China's spot LNG imports for June was $9.465 per MMBtu as 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 138.53 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 beginning of March, 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