[Natural gas] Favorable Factors Reappear The Strong Operation Of The Market

June 12, 2024, 9:21 AM

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After the National Day holiday, China's LNG market showed a mixed but generally rising trend despite a slight drop in average prices to 7,148.74 yuan/ton by October 9th. Resource circulation resumed as transportation restrictions eased, boosting supply and lowering liquid levels at factories. However, tight supply emerged in the northwest due to early winter supply preparations and regional epidemic impacts. Increased demand came from post-holiday restocking, heating needs in northern regions like Northeast China and Inner Mongolia—which began heating on October 7—and higher peak-shaving demand in Central and East China due to constrained pipeline gas. These factors drove up prices in the north. In contrast, the southwest, particularly Sichuan, saw sluggish activity due to ongoing restrictions linked to a major conference and delayed post-holiday recovery until October 9th, with upstream facilities operating at reduced rates. Overall, regional disparities persist, with short-term bulli

During the National Day, due to the high-speed restriction, the circulation of resources was blocked, the distance of the liquid factory was limited, and the upstream multi-row warehouse was operated. After the National Day holiday, the domestic LNG market as a whole showed an upward trend. As of October 9th, the average price of domestic LNG market was 7,148.74 yuan/ton, down by 178.35 yuan/ton from the pre-holiday period, but up by 63.57 yuan/ton from the 8th.

From the perspective of supply and demand, after the holiday, with the revitalization of transportation, the resource circulation roads between different places are opened, the upstream shipments are improved, and the liquid level in liquid factories is generally at a low level. In addition, some liquid factories in the north started the winter supply guarantee mode ahead of time, and the main producing areas in the northwest were affected by the epidemic situation, so the market supply became tight. The demand side will supplement the library after the terminal festival to support the market. At the same time, due to the tight pipeline gas in Central China and East China, the demand for peak shaving of urban combustion has increased, supporting the price increase in the north. Recently, many places in the north have experienced cooling, especially in the three northeastern provinces and Inner Mongolia. Some areas in Inner Mongolia started the heating mode ahead of schedule on October 7th. Local replenishment and early heating stimulated the enthusiasm of upstream shipments, and with the support of various favorable factors, the price of liquid in the north rose. However, due to the National Day restriction, the southwest market lasted until the 9th, and the circulation of resources in the region was blocked. In addition, during the large-scale conference, Sichuan continued to restrict the market, and the upper reaches of the region were operated at reduced prices.

To sum up, at present, there are many factors intertwined in the market, and regional performances are different. The short-term market is boosted by the favorable supply and demand, and the domestic LNG market may continue to run with strong shocks. However, attention should be paid to the epidemic situation and its impact on traffic and downstream demand during the 20th National Congress.

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