In the second quarter, the domestic LNG market showed a sharp downward trend, repeatedly hitting new lows and occasionally a small rise, but it was difficult to recover. Under the off-season demand of consumption and the sharp decrease of terminal demand caused by special events, at the same time, a large number of imported gas continuously enter the domestic market, the contradiction between supply and demand is increasingly intensified, the buyer’s market is more and more obvious, and the liquid price falls again and again. At present, the domestic liquefied natural gas market is at a historical low point, and there is a long and short space.
As can be seen from the chart, the decline in April and may was more obvious, and the decline slowed down in June, and the low level lingered. According to the data of business agency, the average price of liquefied natural gas on June 30 was 2450 yuan / ton, down 2.39% compared with the end of May, 16% lower than that at the end of April, and 27.66% compared with the same period last year. In the second quarter, domestic LNG fell by 25.3%.
Domestic LNG falling below 3000 yuan under pressure
In April, heating in northern China began to end. As the heating demand of natural gas downstream gradually decreased, China’s LNG market gradually entered the off-season, and some factories will enter the maintenance season. In addition, the state vigorously promoted the resumption of production of enterprises, which led to a certain increase in industrial gas consumption, which led to a wave of domestic LNG rise. However, with the continuous decline of international oil prices, even appeared The negative value has an impact on the price of long-term association of LNG import. The price of domestic LNG is under pressure, and the price drops sharply, falling below 3000 yuan / ton, hovering on the cost line, and the profit of liquid plant is seriously reduced.
The decline of feed gas still cannot stop the decline of domestic LNG
After the labor day in May, a short-term replenishment upsurge appeared in the downstream of LNG, and the LNG price rose in line with the trend. The average price on the 6th day was around 2990 yuan / T. however, the rising trend only lasted for one day and then began to fall continuously, which was like a flash in the pan, and the market continued to decline. On May 20, the fixed price of feed gas in Western PetroChina was no longer 1.57 yuan / m3. Instead, it was adjusted to implement the step price mode according to the unit load. The benchmark price was 1.48 yuan / m3, the inlet load was more than 80%, and the gas price was 1.332 yuan / M3. The more gas was used, the cheaper the feed gas price was. However, following the two sessions held in Beijing on the 21st and 22nd, some factories in some regions limited production and stopped production, resulting in the decrease of industrial gas consumption. At the same time, the sales volume of gas stations also declined, and the prices continued to decline. Some liquid plants entered the maintenance plan ahead of time. At the end of May, the domestic LNG price was 2500 Yuan / ton, a new low.
Good maintenance support limited domestic LNG low level
In June, the decline of domestic liquefied natural gas slowed down, and the low level lingered. Since June 15, the pipeline maintenance of PetroChina No.5 treatment plant has affected the production of some liquid plants. Moreover, due to the low price of domestic LNG, some enterprises entered the maintenance stage ahead of time due to the consideration of cost. As a result, the majority of maintenance enterprises in June decreased and the liquid market was boosted. However, the favorable support brought by the tide of maintenance is limited. In the off-season consumption, the demand is reduced, and the profit is greatly reduced by adding in the air. The shipping schedule is tight, the sea land war is becoming more and more fierce, and the domestic liquid companies have failed to support the market. The upward road of LNG is fleeting, and it continues to decline after a short-term stability in the middle of the year. According to the data of the business agency, the average price of liquefied natural gas on June 30 was 2450 yuan / ton.
Natural gas production:
In February 2020, the production will be fast and slow, while in other months it will grow rapidly. In the first quarter, it will produce 48.3 billion cubic meters of natural gas, with a year-on-year increase of 9.1%. The output growth slowed down in May. From January to may, 78.8 billion cubic meters of natural gas was produced, with a year-on-year increase of 10.1%. From January to may 2020, the output of domestic LNG plants is 6.33 million tons, with a year-on-year increase of 34.94%; from January to may, the total LNG supply is about 13.7 million tons, with a year-on-year increase of 32.44%. There is sufficient supply in the market, but the demand is not followed up, and the liquid price is hovering at a low level,
Import volume of natural gas:
According to the data, from January to may, China imported 40.12 million tons of natural gas, up 1.9% year-on-year; the cumulative import volume reached 15.161 billion US dollars, down 15.6% year-on-year. Among them, the total import of LNG was 25.48 million tons, up 7.0% year-on-year; the import volume was 10.405 billion US dollars, down 15.3% year-on-year. At present, China’s main LNG importing country is Australia. Due to the sharp drop of international oil price in the early stage, the price of imported LNG has been continuously reduced, and China is a big consumer. With the steady recovery of economy and the increase of demand, the import volume of low-cost gas continues to grow. This state is expected to continue, and domestic LNG is in a difficult situation.
Natural gas consumption structure:
Natural gas is used in many fields, such as residents’ life, industry and commerce, power generation, transportation, distributed energy and other fields. In 2019, the downstream users of LNG are mostly concentrated in industrial users and gas stations. This year, due to the late resumption of production and work of downstream enterprises, the demand of downstream users for LNG is sharply reduced. In the second quarter, downstream enterprises returned to work and production, and imported gas with high quality and low price entered the market. The apparent consumption of LNG increased rapidly. From January to may, the apparent consumption of LNG increased by 13.1% to 69.3 billion cubic meters.
The pressure of downstream liquid ammonia supply still exists, especially the regional imbalance, which leads to greater supply pressure in some regions. In terms of demand, the peak season of downstream fertilizer demand ends and the downstream procurement withdraws, leading to the expectation of pressure in the later stage of liquid ammonia supply. In addition, the export of phosphate fertilizer is affected more obviously, mainly by overseas epidemic situation, and it is not possible to recover in a short time Therefore, in the later period, affected by both supply and demand, the liquid ammonia market is still easy to fall and difficult to rise. The price of liquid ammonia has risen slightly in recent years, which provides a certain cost support for urea, but the downstream demand is less. The rubber plate factory and compound fertilizer plant follow up appropriately, and the middlemen are cautious in receiving the goods. The urea price is expected to fluctuate slightly in the future market.
The methanol market tends to be stable after a small rise, with light transactions in the industry, and the market is in a wait-and-see situation after the festival, at present, about 1645 yuan / ton; the downstream market demand of dichloromethane is poor, after a short period of stock preparation before the Dragon Boat Festival, the market trading atmosphere is light, and the demand for terminal purchase is insufficient, which can not provide good support for the price of dichloromethane. It is expected that the dichloromethane market will run in a weak position in a short period of time, with limited space for downward adjustment.
It is difficult to boost domestic LNG demand, and it is difficult to have a good expectation
LNG analysts in the business club believe that at present, the growth rate of natural gas demand is slowing down, the pattern of oversupply is difficult to reverse in the short term, and the buyer’s market characteristics are obvious. Now the liquid price has fallen to a low level, while the demand side is difficult to improve. It is difficult to have a good expectation in the short term. Domestic LNG may continue to be low, and the future market still hopes for a boost in demand.