Once October arrives, natural gas prices soar – who benefits the most?
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First, let’s take a look back at the natural gas market in 2017. Until mid-November of last year, natural gas prices were between 3,000 and 4,000 per ton, indicating that the market conditions at that time were not very active. By December 1, prices in some areas reached as high as 9,400 per ton, which is equivalent to 6.7 yuan per cubic meter – showing a sharp rise in the price of natural gas! Rising demand coupled with tight supply! Factors behind the sharp rise in natural gas prices: 1. Price increases. The reason for the rise in natural gas prices is simple – it is caused by an imbalance between supply and demand. 2. Impact of temperature: As we all know, winter temperatures remain an uncertain factor. Based on historical data, in cases of mild winters, the monthly growth rate of natural gas consumption is between 23% and 27% ； On the contrary, if this year is a cold winter, then the monthly average growth rate of natural gas consumption will be 33%-37%. With the impact of switching from coal to gas added on top, this growth rate could be even higher! 3. Policy regulation: If natural gas prices are left to the market, an increase in demand will certainly support those prices! So, with rising natural gas prices, who benefits the most in the end? Let’s first understand the distribution of the LNG industry chain: Natural gas is divided into three segments: upstream, midstream, and downstream. Upstream, the mining side ； CNPC, transportation interrupted ； Downstream, the consumer side. The first to benefit from rising prices are the end-users at the downstream level, who are those responsible for supplying gas. If natural gas prices continue to rise, companies involved in natural gas extraction or those with substantial reserves will undoubtedly be the biggest beneficiaries; it is worth keeping an eye on the leading stocks in this sector.
This post was last edited by Andre_WPWH on 2018-10-11 at 11:19. For inquiries, contact: 13817690573 (same as VX)
Ordinary people’s winter heating has been affected.
This post was last edited by Andre_WPWH on 2018-10-8 at 14:33. Contact via WeChat: 13817690573 (for inquiries)
Since some converted their original fuel to natural gas, supply and demand imbalances that did not exist before have emerged. 1. Heating with gas boilers: Burning valuable chemical raw materials as fuel merely to replace coal, which was originally very cheap, is undoubtedly a problem resulting from overall policy guidance. Using coal for heating to control pollution is already a relatively mature and reliable method; so why switch to natural gas? Is it really for the so-called number of blue-sky days each year? I believe it is to increase fiscal revenue, which has caused many enterprises as well as individuals to face significantly higher costs for using natural gas due to the change in their original fuel sources. 2. The supply gap in natural gas imports is difficult to reduce or eliminate. Reliance on natural gas imports, just like reliance on crude oil imports, is a major constraint in China’s overall economic activities. 3. Different industries are competing for shares in the natural gas supply. Natural gas chemistry, gas-powered power generation, gas-based heating, gas taxis, and gas stoves – when there is a shortage of natural gas supply, competition for shares of that supply inevitably leads to price increases, as the supply side is characterized by monopoly rather than healthy competition. 3. The increased equipment and management costs resulting from the switch from coal to gas, the potential safety costs associated with the use of gas in rural areas, as well as the waste and pollution issues arising from the inability to make proper use of crop straws.
It affects not just heating; it’s a chain reaction. Foolish policies have caused suffering to the people of China.
The price is still reasonable now; the increase isn’t significant. It will soar after October