China’s imported LNG prices hit a three-year low
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China’s imported LNG prices reach three-year low? “Recently, China’s overall import CIF price for LNG has reached its lowest level since the end of February 2017.” ”On May 29, Wang Shiwei from the Index Development Department of the Shanghai Petroleum and Natural Gas Trading Center told Jiemian News. On May 27, the Global Trade Monitoring and Analysis Center of the General Administration of Customs and the Shanghai Petroleum and Natural Gas Trading Center jointly released China’s comprehensive import CIF price for LNG. According to these figures, from May 18 to 24, China’s comprehensive import CIF price for LNG was 2,184 yuan per ton, a decrease of 638 yuan per ton compared to the previous week, representing a decline of 22.6%. Wang Shiwei said that at the end of February 2017, the comprehensive import CIF price of LNG in China was 2,046 yuan per ton, and it has remained above 2,184 yuan per ton ever since. China’s imported LNG consists of two parts: regular purchase and sales agreements based on long-term contracts, and spot purchase agreements. Among them, the pricing method for long-term contracts is generally linked to international crude oil prices. Wang Shiwei said that due to the pricing cycle, the CIF prices of some long-term contract LNG import shipments in China have begun to reflect the impact of the sharp drop in international crude oil prices in March this year.
According to official statements from Hudong-Zhonghua Shipbuilding, on the afternoon of January 14, Mr. Ali Abu Jabral, the Chief Operating Officer of Qatar Gas Company, and his entourage visited Hudong-Zhonghua, which is part of China State Shipbuilding Corporation. Chen Jianliang, the Party secretary and chairman of Hudong-Zhonghua, as well as He Jianghua, the chief designer for LNG ships, gave them a warm reception. Chen Jianliang extended a warm welcome to Mr. Jaballah and his party. He said that Hudong Zhonghua is a key shipbuilding enterprise under China State Shipbuilding Corporation, the world’s largest shipbuilding group, and the only large-scale LNG ship builder in China. The Qatar natural gas project is one of the projects that Hudong Zhonghua attaches the greatest importance to. The cooperation with Qatar’s natural gas will serve as another platform to showcase Hudong Zhonghua’s capabilities and the quality of Chinese manufacturing to the world. HDZC is willing to contribute to the development of Qatar’s energy economy and to the advancement of China’s Belt and Road Initiative, in order to achieve mutual benefit and win-win outcomes for both sides. HDZ has been active in the LNG sector for over 20 years, having built 22 large-scale LNG carriers to date. In 2019, it overcame key technical challenges and became the only company in the industry to build both the No.96 and MARK III types of membrane LNG carriers. It possesses the capabilities for the design, manufacturing, maintenance, and modification of equipment for the entire LNG value chain, including transportation, storage, and refueling. It has achieved a production capacity to deliver 8 to 10 large-scale membrane-type LNG carriers per year, making it a model for the professional development, design, and construction of advanced large LNG carriers worldwide.
It seems that LNG from all over the world is being shipped to China
For downstream gas companies, there is an excess of gas supply this year; they have shifted from their previous reliance on others for help, and it seems that their status has suddenly improved. But there are also concerns: demand is already weak, making it difficult to utilize the existing contracts for pipeline gas; meanwhile, with such a significant drop in the price of offshore gas, companies surely want to purchase LNG as a substitute for some of the pipeline gas in order to reduce their costs. Additionally, factors such as relationships with suppliers and ensuring supply during winter must be taken into account. Even though the price of offshore gas is low, it’s not possible to act aggressively in purchasing more of it. At the same time, such low LNG prices force downstream gas companies to face renewed direct competition from LNG on-demand supply. There’s no need to even talk about liquid gas plants in the interior areas – the purchase price of liquid gas from the sea is lower than that of gas sourced through pipelines. What’s the point of continuing with such operations? Provinces located near the coast might as well give up outright; production volumes at liquid gas plants will surely be extremely low during this off-season. However, this drop below 2,000 yuan per ton is likely just the beginning. The previous article: “Shocking discovery at the customs: less than 1 yuan per square meter!” As mentioned in “China’s import of U.S. natural gas is 30% cheaper than that from Russia,” there is generally a significant delay in the pricing of both domestically imported pipeline gas and imported gas under long-term contracts, which are linked to international oil prices.