Recently, the international natural gas prices have plummeted, expanding the price gap between China and the overseas to 1,000/mt. The slump was related to higher-than-expected natural gas inventory in Europe, sagging demand on warmer weather and increased LNG receiving capacity. As a result, the expectations for lower domestic LNG prices in the future were strengthened. Some industry insiders said that lower LNG prices bode well for downstream energy companies, and may help them recover previous losses caused by high costs last year.
As of February 16, China's LNG imported prices stood at 5,422yuan/mt,, while the domestic LNG prices last week rose slightly to 6,493 yuan/mt, suggesting a gap of 1,071 yuan/mt.
When LNG prices rose sharply in 2022, energy enterprises were faced with huge cost pressure. But since this year, the international LNG prices have been falling rapidly on sluggish demand, leading to growing LNG imports in China and bearish sentiment on domestic LNG prices.
Downstream energy companies are currently bearish on feedstock prices, expecting the LNG prices to range between 4,000-5,000 yuan/mt this summer. In order to reduce cost pressure, they have shortened the signing cycle for long-term orders.