Industry News_News

FromJanuarytothemid-September,LNG’saveragemarketpricehasbeenaround3,000Yuan/tonandthentakesoff;OnDecember1,LNGpricereached9,400Yuan/ton,anditsaveragepricewas7,000Yuan/ton,hittinganewhigh;OnDecember4,DevelopmentandReformCommissionheldLNGpricewarningmeetingtoensurethemarketpriceofLNGduringpeakloadofwinterisbasicallystable.ButitwasofnohelpintheshorttermandLNGpricewouldcontinuouslyriseafteraslightdrop;OnDecember24,morethan20stations’LNGsourcewas10,000+Yuan/ton,equivalentto7+Yuan/m3,anditspriceatLNGfillingstationreached13Yuan/kg;OnDecember25,LNGpricebegantocollapse;OnDecember30,thesellingpriceofLNGofmostLNGplantsinShaanxi,InnerMongolia,Hebei,Henan,ShangdongandJiangsu,etc.hasdecreasedto4,500-6,000Yuan/ton,halvedcomparedto12,000Yuan/toninthemiddleofthemonth.WhydidLNGhavesuchdrasticchanges?FromJanuarytothemid-September,2017,thedemandandsupplyofLNGwasrelativelybalanced,andthemarketpricefluctuatingrangewasnotlargeandfluctuatedaround3,000Yuan/ton.Frommid-SeptembertoDecember24,“coal-to-gas”and“26+2”stimulatedtherapidgrowthofnaturalgasdemandandthenorthernChinaenteredheatingseason.Underthebackground,domesticdemandfornaturalgasincreasedsignificantlyandLNGwasinseriousshortsupply.Inordertoprotectthelivelihoodofthepeople,LNGenterprisesinShanxi,InnerMongoliaandNingxiaandotherprovincesimplementedgaslimitvigorouslyataratioupto50%-60%foralongerperiod,whichhasmadetheLNGpricerisetoacertainextent.SinceDecember25,“threebarrelsofoil”(CNPC,SINOPECandCNOOC)jointenlargingofsupplyprotectionandthemarketsupervisionbytheNationalDevelopmentandReformCommissionshowedsignsofgoodresults.TianjinBindagaspipelinehasbeenputintouserecently,whichmarksthefirstinterconnectionbetweengassupplypipelinesofCNOOCandCNPCandfurtherreleasesthegassupplycapacityofthenorthernChina.Recently,theNationalDevelopmentandReformCommissionhaspublishedandpunishedanumberofnaturalgasenterpriseswhichincreasedthegaspricewithoutauthorizationandindisguise.SomeenterprisesrepresentedbyCaoxianHengyuanGasStationinShandonghavebeenpunished.Asaresult,themomentumofrisingnaturalgaspriceisundercontrol.Moreimportantly,asthenationalmeasuresof“Protectingthecivilianuseandlimitingindustry”areimplemented,largeindustrialconsumersinmanyplaceswereshutdown,resultinginthedecreaseofLNGdemand.ThechangesinthesupplyanddemandhascausedthenationalLNGpricebeginstodrop.WiththeadventofNewYear’sDayandSpringFestivalholidays,LNGindustrialuserscontinuetoreducetheirconsumptionandthemarketpriceofLNGwilldropfurther.Therefore,afterthepriceofLNGhasbeencompletelyliberalized,thesupplyanddemandsituationisanimportantfactoraffectingthepriceofLNG.Thepriceadjustmentmeasuresofthegovernmentalsostartfromthesupplyanddemand.SupplyanddemandremainstightAtpresentthepriceofLNGdropsmainlybylimitingthegasconsumptionofindustrialconsumer;inotherwords,LNGpricedropisrealizedviathelossesofindustrialconsumers.However,thesupplyanddemandofourcountryremainsverytight.Asthe“coal-to-gas”measuresarefurtherimplementedandtheforeseeablenaturalgasconsumptioncontinuesincreasing,thesupplyanddemandofnaturalgaswillnotbeeasedinthenextyear.ItisofgreatsignificancetospeeduptheconstructionofLNGterminals,pipelinesandgasstorageandotheropen-sourcework,as“Limitingindustrialgasconsumptiontoprotectthelivelihoodofthepeople”isnotalong-termplan.

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