Kilo Petrochem

On October 26, the China 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 the China LNG comprehensive import CIF index was 282.44 from October 17 to 23, down 9.30% month on month and up 73.50% year on year. Last week, the US natural gas market fell all the way down. On the supply side, the total natural gas output of the 48 US states continued to decline slightly on a weekly basis, but remained above 100 billion cubic feet per day, up nearly 6% year on year. The number of active natural gas drilling rigs has not changed in recent years, maintaining a high level in the past two years. On the demand side, residential/commercial gas consumption continues to rise, driving the increase of total consumption; The Cove Point, the LNG export facility, continued to stop production for maintenance, but the production of Sabine pass rebounded, increasing the overall processing capacity of LNG. In terms of inventory, according to the relatively lagging data released by the US Energy Information Administration (EIA) last Thursday, the weekly inventory increase was 111 billion cubic feet, higher than market expectations, and the inventory has increased significantly for six consecutive weeks. Compared with the average value of the same period in the past five years, the inventory decreased by about 5.2%, the gap continued to narrow, and the fundamentals tended to be loose. In terms of weather, according to the weather forecast of the National Oceanic and Atmospheric Administration (NOAA) last week, the temperature in the United States will be similar to that in the same period of previous years. The relatively suitable temperature on the whole makes the influence of current temperature factors on gas price weak. The high output, mild climate and rapid stock accumulation speed made the US natural gas price continue to decline. Last Friday, the contract in November once fell below the integer threshold of $5 per million British heat, and the near end price dropped significantly. As of this Tuesday, the settlement price of NYMEX natural gas contract in November was US $5.613 per million British thermal, down on a weekly basis. In Europe, natural gas prices also fell. On the supply side, Beixi Line 1 continues to stop production. As the main gas source in Europe, Norwegian gas is relatively stable, and the import pipeline gas in Africa has declined at a high level. The import volume of LNG in Europe remained at a high level, but due to the limited reception capacity, the high inventory and the impact of the inter month price difference, the floating warehouse in Europe was at a historical high. On the demand side, as the temperature gradually drops, the demand starts to rise. However, affected by the policy, the demand increased slowly, and the year-on-year decrease was large, reaching the target set by the EU to reduce by 15%. In terms of inventory, according to the data of the European Natural Gas Infrastructure Information Platform (GIE), the overall inventory of gas storage in Europe has reached 93.61%, and the inventory of Britain, France and Germany is close to full. Under the negative influence of gradually loose overall fundamentals, the market as a whole was under pressure. Last Thursday, the market rebounded due to Germany's opposition to the price limit scheme for natural gas, but after the opening of last Friday, the market immediately returned to the downward trend, giving back its gains. As of this Tuesday, the settlement price of the main TTF contract was 99.794 euros per megawatt hour (about 28.8 dollars per million British fever), with a significant decline on a weekly basis. In Northeast Asia, due to the high spot price and the recent epidemic situation, China's gas demand has been restrained. According to the data monitoring of the trading center, the recent arrival of imported LNG cargoes has declined significantly year on year. According to the data released by China's natural gas information terminal (E-Gas system), the arrival of imported LNG in China last calendar week was only about 1.27 million tons. The spot CIF price of LNG in Northeast Asia remains at a relatively high level due to the record high gas prices in Europe, both major LNG importing regions. According to the monitoring of the trading center, at present, there are few transactions of Chinese enterprises in the real goods market, so the high price at this stage cannot represent the real overall LNG import cost of Chinese enterprises. Moreover, thanks to the 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 relatively low price imported pipeline gas, China has little demand for high price spot LNG imports in recent years, so high price spot LNG has little impact on China's natural gas market as a whole. As of this Tuesday, the CIF price of spot LNG imported by China in December, assessed and released by the Shanghai Oil and Gas Trading Center, was $27.411 per million British thermal. From the perspective of LNG comprehensive import CIF price index, China's LNG comprehensive import CIF price index last week was 282.44 points, which has fluctuated greatly in recent years, and is higher than the same period last year. The main reason is that the international crude oil price linked to the pricing of the medium and long term agreements, which account for the vast majority of imports, has gone through a bull market in the past year. For a small number of imported spot goods, due to the pricing cycle, the pricing cycle of the spot part of the current CIF price index is mainly in August this year. Due to the high spot price during this period, the import volume of spot goods has decreased significantly. Under the comprehensive influence, the CIF LNG comprehensive import price index has fluctuated greatly in the recent period. 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. It was first launched on October 16, 2019, and was published in the form of price. It was adjusted to be published in the form of index from September 23, 2020. The index was based on the first calendar week of 2018 (China's LNG comprehensive import CIF price in that week was 2853 yuan/ton, and the price index was 100), Comprehensively reflect the price level of China's LNG imports landed last week. This is a beneficial exploration of China's natural gas price marketization pricing system, is conducive to cultivating domestic natural gas pricing benchmarks, is conducive to the timely and effective connection between the domestic market and the international market, and further enhances China's influence in the international oil and gas market.

The freight of liquefied natural gas (hereinafter referred to as "LNG") carriers is still soaring. According to the latest data from the Baltic Exchange, the daily rent of LNG carriers in the spot market has reached the highest level of 450000 US dollars/day, up six times from the beginning of this year. Data shows that last year, the cost of renting a LNG carrier was about 30000 US dollars/day to 300000 US dollars/day. However, since the conflict between Russia and Ukraine, this number has been rising, constantly breaking new historical highs. Lin Boqiang, president of the China Energy Policy Research Institute of Xiamen University, said in an interview with the China Economic Times that the current surge in LNG carrier freight has a lot to do with the Beixi pipeline accident. When the pipeline transportation is blocked, only shipping can be carried out. Due to the imbalance between supply and demand, LNG carrier fees will inevitably rise, which is expected. "Behind the soaring LNG shipping costs is the deepening imbalance of the global energy supply side and the short-term accumulation of European energy crisis risks." Chen Jia, a researcher at the International Monetary Institute of Renmin University of China, told our reporter. With the outbreak of the Russian Ukrainian conflict, EU countries accelerated the "replenishment" globally in order to replace the imported natural gas from Russia, making the supply of LNG carriers, the means of marine transportation of natural gas, short of demand, and the freight soaring. In Chen Jia's view, the huge arbitrage space of LNG international trade is a factor that cannot be ignored in the soaring LNG shipping costs. Recently, the price difference between the international LNG market transaction price and the US local transaction price has soared from 6-8 times to 10 times, even soaring, which directly triggered a massive influx of global excess LNG production capacity, including North America and Asia, to energy scarce regions represented by Europe. "Recently, the explosion of Beixi Pipeline has had a great impact on European countries. Due to the huge energy demand in Europe, the high freight rate of LNG carriers may have to continue for some time, because it will take a long time to build a new pipeline." Lin Boqiang said. With the high landscape of the LNG transport market, the LNG carrier market is also gradually warming up, and the order quantity and price of LNG carriers are rising. According to the statistics of Clarkson, as of the beginning of October, the global order of LNG carriers has reached 128 this year, which is the highest level since statistics. From 2018 to 2021, the global turnover of new LNG carriers will be 77, 60, 53 and 86 respectively. As we all know, LNG carrier is internationally recognized as a ship with high added value and high technology content, and is often praised as the pearl in the crown of shipbuilding industry. In the international shipbuilding industry competition, LNG carriers are also considered as the symbol of high-end ship type market competitiveness. In previous years, due to the limited overall market demand, China's LNG carrier orders were relatively limited. According to VesselsValue data, in 2018, Chinese shipyards won 10 orders for LNG carriers, with a total order value of US $563 million. However, since they were all small and medium-sized LNG carriers at that time, the average single ship value was only US $56 million. This year, this situation has changed. In the first three quarters of this year, from the perspective of order value, the order value of China's LNG transport ships accounted for 20% of the world's share, the highest proportion in the past five years. "The long-term imbalance between supply and demand and the expectation of sharp rise and fall in short-term demand have further exacerbated the bottleneck of LNG transport capacity, resulting in its freight rate fluctuating with the wave of bulk trading." Chen Jia said.

According to the latest statistics disclosed, the number of orders received and completed in the first three quarters of China's shipbuilding industry maintained the leading position in the world, and in September there was a trend of higher month on month. In October, China's shipping enterprises won new orders for large LNG carrier products, demonstrating their competitiveness in high-end manufacturing worldwide. China maintains the first place in the world in terms of new volume of ships According to the latest data disclosed by China Shipbuilding Association on October 27, in terms of deadweight tons, from January to September, China's shipbuilding enterprises accounted for 45.9%, 53.6% and 48.0% of the world market shares respectively in terms of completed volume, new orders and hand orders. South Korea and Japan ranked second and third in the number of new orders, accounting for 31.3% and 10.2% of the world market shares respectively. Li Yanqing, secretary-general of China Shipbuilding Industry Association, revealed that, according to the preliminary statistics from January to September, the profits of the whole industry reached nearly 5 billion yuan, an increase of 33.7% over the same period last year. In terms of specific indicators, in the first three quarters of 2022, 27.8 million deadweight tons of shipbuilding were completed nationwide, down 8.4% year on year; 32.45 million deadweight tons of new ship orders were received, a year-on-year decrease of 40.1%. By the end of September, the orders for handheld ships were about 103 million deadweight tons, up 11% year on year. Based on the previous data, it is estimated that the completion and new arrivals of China's shipbuilding enterprises in September have increased significantly month on month compared with the previous month, with the increase of 25% and 89% month on month respectively. The trend of order recovery is consistent with that of global shipbuilding order recovery in September. According to the latest statistics of Clarkson, in September 2022, the world signed 72 new orders, and the deadweight tonnage increased by 25% month on month. The continuous recovery of the completed quantity is even more surprising. Since the beginning of this year, most of the shipping enterprises have had full orders. The repeated epidemic and extreme high temperature in the second quarter have further disrupted the pace of ship production. The latest data shows that China's shipbuilding enterprises completed 9.3 million deadweight tons in the third quarter, up 5% from the second quarter. Cao Bo, deputy director of the Statistics and Information Department of the China Shipbuilding Association, said that the shipyard had a greater willingness to "deliver the ship quickly": first, there were more ship positions to receive orders; The second is to recover cash and improve the company's profit structure; Third, expand market share to occupy a favorable position for enterprise transformation. From the perspective of ship types, the proportion of new orders for container ships and gas ships has increased significantly since this year. In terms of deadweight tonnage, the proportion of container ships in newly received ship orders increased from about 30% to 35%, and the proportion of gas ships increased to 11.2%. In contrast, the proportion of bulk carriers and oil tankers has declined. At the same time, the global "green ship" orders in the first three quarters of this year hit a new record. According to the latest statistics of Clarkson, in the first nine months of 2022, 59% of the newly ordered ships use clean alternative fuels in terms of deadweight tons, a record high, and only 31.5% in 2021. LNG power is the mainstream choice, 57% of new ship orders use LNG power, and more and more ships tend to choose multi fuel/fuel reservation design, so as to provide more choices in the future. In terms of price, global bulk carrier and oil tanker prices fell in September, container ship prices remained flat, while large LNG carrier prices continued to rise. Clarkson data shows that the price index of new container ships in September was flat month on month, while the price indexes of new bulk carriers and oil tankers fell month on month. On October 21, Daewoo Shipbuilding announced that it had won the construction contract for two new 174000m3 LNG ships, with the cost of a single ship reaching 250 million US dollars for the first time in history. Continuous breakthrough in high-end manufacturing At the same time of leading the total volume, China has made new breakthroughs in the field of shipbuilding high-end products - large LNG carrier manufacturing. In the first three quarters, the volume and price of new orders for large LNG carriers rose simultaneously, and the market share of Chinese enterprises continued to rise. According to the statistics of Clarkson, as of the beginning of October, the order of large LNG carriers ordered this year has reached an all-time high of 128, and the order of new large LNG carriers last year was 86. According to the official orders, China has won 28 orders, accounting for 22% of the global market, breaking the monopoly of 90% of Korean enterprises in the past. Since October, Chinese enterprises have successively announced new orders, further improving the market share of Chinese enterprises in large LNG carriers. Industry insiders are optimistic that the domestic LNG ship market share will reach 25% by the end of this year, and will increase significantly to the level of 35% - 40% in a few years. On October 24, China Shipbuilding (600150) announced that its wholly-owned subsidiary Jiangnan Shipbuilding had signed a letter of intent for the construction of two 175000m3 LNG carriers with a Singapore shipowner, with a total contract amount of about 460 million US dollars. It is expected that the ship will be delivered before the end of July 2027. On October 26, Yangzijiang Shipbuilding announced that it had signed two 175000m3 LNG carrier construction contracts with European shipowners. This is the first time that Yangzijiang Shipbuilding Industry has taken orders for large LNG carriers. After becoming the Hudong Zhonghua Shipbuilding, Jiangnan Shipbuilding and Large Ship Group, the company has become the fourth domestic shipping enterprise to enter the large LNG ship building market, and also the first private one. It is worth noting that the Yangtze River shipping industry just obtained the GTT company qualification certification necessary for manufacturing large LNG carriers at the beginning of September. In addition, China Merchants Group Heavy Industry, which just obtained the certification of GTT Company in October, may also be close to a good thing. According to International Ship Network, China Merchants Heavy Industry (Jiangsu) may have signed a letter of intent with Danish ship owner Celsius Tankers to build 4+8 180000 m3 LNG ships. According to the outflow, the price of each new ship is about 231 million dollars. If all the alternative orders come into effect, the total order price may reach an amazing 2.772 billion dollars.