South China Terminals Start Pushing LNG Price Upward
This week, LNG receiving terminals in South China raised truck loading prices universally, leading by CNOOC. On September 22, CNOOC Zhuhai announced to increase the offer by RMB 200/mt ($0.56/mn Btu) for the Pearl Delta region, and the inland road delivery discount was also reduced. Other terminals immediately responded to CNOOC’s lead, and it is estimated the truck loading price in Guangdong and Guangxi will be pushed up by RMB150-200/mt within this week, while the uptrend will then spread into the inland regions soon.
China’s LNG terminals used to start the price adjustment for winter in advance in October, however, SCI expects terminals are ready to start the maneuver to push the LNG price into uptrend tunnel in September, because of the strong appetite from LNG filling stations, the expanded peak-shaving storage capacity at city gas companies, the extremely low price level, and the optimistic outlook on winter truck loading prospect. Therefore, CNOOC Zhuhai’s price adjustment is considered as the battle cry for this winter’s LNG price recovery campaign, and not only LNG terminals in South China will follow tightly, but also those in East China and North China will join the tideway before October’s National Day holiday.
Based on those estimations, SCI believes that China’s LNG price level will rebound from the current RMB 2,600/mt ($7.3/mn Btu) at the pace around RMB 100/mt per week to around RMB 3,500/mt ($9.9/mn Btu) level in early November and then RMB 4,000/mt ($11.3/mn Btu) level in late November or early December, and some regional prices may peak to RMB 4,500/mt ($12.7/mn Btu) due to short-term fundamental fluctuations. China’s LNG market will witness a prosperous winter soon, with sales at historical highs and prices at the peak of the year.
