LNG& Natural Gas: Three highlights highlight the strong correlation between the two

Third, the coastal LNG receiving terminal market, LNG and pipeline gas market competition relationship is strong

Due to the characteristics of LNG intermediate market and supplementary peak balancing mentioned above, pipeline gas and LNG have a certain competitive relationship in meeting the needs of various fields, especially in the coastal areas of North, East and South China, where the industrial consumption volume is relatively considerable, and the competition and cooperation between the two is more obvious.

According to the statistics of Zhuochuang Information, in 2021, the consumption of LNG in the coastal regions, including Shandong, Hebei, Guangdong and other provinces, reached 19,791,100 tons, accounting for more than 52% of the total domestic consumption, and the huge consumption volume of coastal areas has long played a vital role in the domestic LNG market. In recent years, industrial point supply enterprises in coastal areas have developed rapidly, and industrial fuel accounts for 41% of the total LNG consumption, which is why the use of local point supply enterprises can have an immediate impact on LNG prices, and the changes in LNG prices can also be clearly reflected in the current situation of point supply and demand. At present, the construction and development of pipeline networks in coastal areas are also relatively mature, especially in North and East China. In these areas where the pipeline network is laid intensively, most of the points for enterprises have the dual gas source guarantee of pipeline gas and LNG, which not only enables the terminal enterprises to flexibly switch and choose between the two according to the change of price advantage. It also promotes the price competition between pipeline gas and LNG. In the stage of sufficient LNG price rise, the price advantage of pipeline gas has been highlighted, and more and more enterprises will switch to pipeline gas. This transfer of consumer demand of industrial enterprises on the one hand will stimulate pipeline gas prices, and on the other hand, LNG prices will gradually fall due to lack of demand support. Similarly, at present, the pipeline gas terminal retail price is becoming more and more normal to guide and link LNG prices.

Iv. Summary

On the whole, no matter in terms of supply, demand, market mentality or price, the relationship between the entire natural gas market and the LNG market is obviously close and bidirectional. Through the development status of the overall natural gas market, we can see the essence of the changes in the LNG market, and the changes in the LNG price trend can not only reflect the current situation of LNG supply and demand. It can reflect the current situation of domestic natural gas supply and demand. China's LNG market mechanism is perfect, the competitive nature is strong, LNG market to a certain extent has become the auxiliary pipeline gas market on the road to the market maturity of the medium, which is also in the process of China's natural gas market reform process "Chinese characteristics".