Kilo Petrochem

Recently, due to various factors such as the remarkable progress in gas storage in the EU and the announcement of a new round of emergency energy measures, the price of natural gas in Europe has declined all the way. From October 24 to 25, the closing price of Dutch TTF monthly futures, which is regarded as the "wind vane of European natural gas prices", fell below 100 euros/MWh for two consecutive days, and fell back to the price level in the first half of June this year, down more than 70% from the high price of 350 euros/MWh in August.

Spot prices fell even further to a negative value. On the 24th, spot prices of some European natural gas fell to -15.78 euros/megawatt hour, the lowest price ever.

In the opinion of the experts interviewed, the recent accumulation of port cargo and excess LNG supply in some parts of Europe directly led to the sharp drop in spot prices. However, in the future, given the approaching winter, rising consumer demand and the lack of overall European gas storage facilities, the European natural gas market will still be in short supply. In terms of price, it is expected that there is still room for downward adjustment in the short term, and the overall situation will remain volatile.

As of press release, when the Dutch TTF futures price was 100.5 euros/megawatt, it continued to hover at a low level.

Some spot gas prices fell to negative values

Recently, the price of natural gas in Europe suddenly changed. The closing price of Dutch TTF monthly futures fell below 100 euros/megawatt hour for two consecutive days, and the spot price collapsed to a negative value.

This is partly due to the positive gas storage progress in Europe. According to the data of European Natural Gas Infrastructure Association (GIE), as of October 24, the gas storage rate of EU has reached 93.61%, that of Germany 97.53%, and that of Denmark 99.85%, which is close to full load.

Previously, due to the sharp reduction of natural gas imports from Russia, Europe increased imports from other suppliers, including pipeline gas and liquefied gas. However, due to limited receiving capacity and other reasons, some LNG ships failed to dock for unloading.

According to Xinhua Finance and Economics on the 24th, the real-time monitoring data of China's natural gas information terminal (E-Gas system) LNG trade showed that there are more than 10 LNG carriers waiting to unload in the waters around Spain, of which 7 LNG carriers have stayed for several days in the waters near the port of Cadiz in the country, and it is estimated that more than 600000 tons of LNG will be loaded.

Du Bingqin, energy and chemical analyst of Everbright Futures, told reporters of the 21st Century Economic Report that the port congestion caused by sufficient inventory and limited loading and unloading capacity was the direct cause of the negative spot price of European natural gas in the past two days. "The limited handling capacity leads to the increase of port supply, and the limited transshipment capacity leads to the inability to transport the unloaded goods in time, which will also increase the accumulation of goods, thus increasing the spot supply."

At the same time, the launch of a new round of emergency energy measures in the EU has also stimulated the downward trend of gas prices. On October 18, the European Commission proposed new emergency measures such as joint purchase of natural gas and implementation of a price limit mechanism for European natural gas benchmark prices. At the meeting of EU member states' energy ministers held this week, EU member states generally supported the joint procurement of natural gas. It is reported that the total volume of joint procurement will reach 13.5 billion cubic meters. However, there are still differences among countries on the implementation of the measure of gas price limit.

In addition, "in terms of renewable energy, the wind conditions in Europe are good in the near future; and Germany will keep three nuclear power plants in operation until next April, which may reduce the demand for natural gas procurement by the power generation sector to some extent. The dull demand has restrained the upward space of prices to some extent." Du Bingqin added.

On the demand side, weather is also a major factor. Wang Yafei, a natural gas analyst at Jinlianchuang, told the 21st Century Economic Report that "the overall temperature in October (in the European continent) was higher than the seasonal level in previous years, and the demand for gas heating fell, which stimulated the price to fall."

However, it should be noted that "although the current temperature in Europe is on the high side, as the weather turns cooler, the heating demand may start to rise in November, and then the European gas price is expected to rise again supported by the heating demand." Du Bingqin said.

Price trend will be subject to weather

Since the Russian Ukrainian conflict, European natural gas supply has fallen into great uncertainty.

On this side, in the game of Russian and European sanctions, Beixi No. 1, the "main artery" of Russian natural gas to Europe, stopped gas supply for several times. Now the pipeline is damaged, and the supply is far from being resumed; On the other hand, the European Union, which is heavily dependent on Russian gas, is constantly seeking for gas, which not only increases the import of natural gas from Norway and Azerbaijan, but also buys liquefied natural gas from the United States and other places at high prices.

Under the influence of various factors, the European gas price once rose sharply, but recently it has fallen sharply. From a time period perspective, even though the EU announced a 15% reduction in natural gas consumption and some member states announced the resumption of coal power and other response measures, market panic could not be alleviated, and the Dutch TTF monthly futures price soared from 92 euros/MWh to 350 euros/MWh. From September to October, there was a trend of correction, and the price gradually fell below 100 euros/MWh.

Previously, Chen Weidong, president of the National Institute of German Studies and former chief researcher of CNOOC Energy Economics Research Institute, said in an interview with 21 journalists that "the impact of the Russian Ukrainian conflict on natural gas prices has passed."

In the opinion of many experts interviewed, the next natural gas price trend in Europe will largely depend on the weather. Wang Yafei believes that if the temperature is normal, the current storage level of European gas storages can be supplied until February next year; If you encounter extremely cold weather, you may feel nervous; The current LNG supply in Europe is (temporarily) surplus, and the U.S. free port will resume exports in November, so the decline in European natural gas prices is likely to continue.

In terms of spot goods, Du Bingqin believes that due to the weak LNG loading and unloading infrastructure and regasification capacity of European ports, it is expected to remain below the futures price.

LNG carrier blocked at European ports

It is worth noting that in recent months, Europe has stepped up its procurement of LNG. In June this year, the EU imported LNG from the United States even more than the natural gas imported through pipelines from Russia, for the first time in history. This also stimulated the increase of LNG ship freight. On October 26, data from SparkCommodities, an LNG freight and price evaluation agency, showed that the spot transportation evaluation price of Spark30S (Atlantic) LNG had risen to 450000 dollars/day.

Lv Na, a natural gas analyst at Jinlian Chuang, told the 21st Century Economic Report that recent months are the peak season of LNG transportation market, and the rise of freight rates is normal. However, the energy crisis triggered by the Russian Ukrainian conflict has exacerbated the tight supply of natural gas in Europe, and the increased procurement of LNG by European countries has further stimulated the rise of freight rates.

With the hot procurement market, temporary LNG oversupply occurred in some parts of Europe. It should be pointed out that the whole LNG transportation process needs to go through the steps of liquefaction and regasification. Therefore, transportation and unloading are particularly important. Generally speaking, LNG ships used for transportation transport liquefied gas at a low temperature of minus 162 degrees Celsius, also known as "marine super refrigerated vehicles". Currently, there are many "marine super refrigerated vehicles" wandering around the European coast.

Du Bingqin explained to reporters that, "The overall LNG receiving capacity and regasification capacity in Europe are limited, most of the LNG import capacity is located in the Iberian Peninsula, and some countries (such as Germany) are highly dependent on natural gas import There is no LNG receiving terminal and wharf, and the transfer capacity is limited. At the same time, Europe is short of re gasification chemical plants and pipelines connecting countries with re gasification facilities, which makes some LNG ships only temporarily stored in oil tankers, floating on the sea and waiting for unloading. "

In addition, it is difficult to rapidly improve the LNG receiving capacity in the short term. Du Bingqin said that although Europe has increased its investment in the construction of LNG terminals, it will take 3-5 years for traditional land terminal facilities to be fully completed. However, as winter approaches, the excessive supply of fabric will change.

Wang Yongzhong, Director of the International Bulk Commodity Research Office of the World Economic and Political Institute of the Chinese Academy of Social Sciences, said to the 21st Century Economic Reporters: "Previously, due to the high gas prices in Europe and the active spot market, merchants did not rush to buy LNG locally, which was limited by the receiving capacity, resulting in a situation of oversupply. In the future, considering the rising demand in winter, and the lack of storage facilities in Europe as a whole, which cannot support consumer demand, the overall European natural gas market will still be in short supply."