Killing Ukraine: It's a Gas

Who wins? American LNG exporters. Who loses? American consumers and American workers. They will pay more for natural gas as it is bid away by Europe at higher prices. Also, American valued-added industries such as fertilizer and chemicals will also suffer as prices rises. Low natural gas prices had shfited production and investment in new plant & equipment into the U.S. The U.S. still has an advantage, but it will shrink as gas prices converge with world markets.

LNG Top

I'm still bullish natural gas for this macro cycle, but it may be time for some pullback.

Short Cherniere

LNG Future is Now: Chinese Prices Rise Faster Than Bitcoin

Chinese prices were around 4000 yuan /ton a month ago, now they have blasted through 12,000 yuan /ton. Prices exceed the 2011 highs.

iFeng: 液化天然气暴涨一月破万！快过比特币

The reason for this rising wave of LNG, dean of the Graduate School of Tsinghua University, former Head of the Department of Thermal Engineering, Yangtze River scholar Professor Yao Qiang said, while rising demand for natural gas, natural gas supply, but there are some problems. First, the planned overseas resources have been "ball dropped." Originally scheduled for 2017 put into operation in Tianjin Petrochemical LNG receiving terminal can not be put into operation as planned, reducing the supply capacity 2000-30000000 m3; Central Asian gas compared to the planned supply contracts declined by 4000 to 50,000,000 m3 / day, the new Shaanxi-Beijing put into operation four-wire can not play a role, leading to supply shortages, and are concentrated in the northern region.

Meanwhile, with the continual progress of "coal to gas," there is some support and boost the role of LNG prices.

FT: China shakes the world

China’s strategy of shifting away from coal and towards gas is also having a significant impact on LNG markets, driving spot prices in Asia up to almost double their lows earlier in the year. Reuters reported that LNG was being re-exported to China from Japan, and tankers were being diverted from as far away as Brazil. In a sign of China’s desperation for gas, the state-controlled oil company Cnooc hired 100 lorries to transport LNG 1,400 miles from the south of the country to the north. Cnooc’s Tianjin LNG import terminal near Beijing is already working flat-out.

Bloomberg: The Whole World Is Paying the Price for Cleaner Air in China

Policies promoting natural gas use have helped boost China’s consumption by 19 percent this year and raised it to the world’s second-biggest importer of liquefied shipments of the fuel, lifting prices for spot cargoes. Higher gas prices are boosting demand for coal, which has already seen prices rise because of separate Chinese policies restricting mine production, Goldman analysts including Christian Lelong said in a Dec. 12 research note.

Earlier this year:

Bloomberg: Liquefied Natural Gas Is All the Rage in the Trump Administration
FT: The Financial Times Reports on President Trump’s LNG Export Push

Donald Trump is engineering a sharp shift in US energy policy by using natural gas exports as an instrument of trade policy, championing sales to China and other parts of Asia in an effort to create jobs and reduce US trade deficits. In an attempt to unleash US energy resources, Mr. Trump is trying to promote more liquefied natural gas exports and not just use LNG as a geopolitical weapon aimed at nations such as Russia, as was the stance of his predecessor Barack Obama.

Desmog: Trump Admin Quietly Pushing 'Small Scale' LNG Exports That Avoid Environmental Reviews

Although it is a better strategy to keep supplies at home and sell value-added products using cheap natural gas, the gap between U.S. and Asian prices is too large for the market to ignore. The LNG will flow.