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.