Natural Gas Market Morning Brief (June 17, 2026)

Key themes: With the signing of the agreement between the US and Iran in Geneva on the 19th imminent, TTF has fallen 18% in four days to around 41 euros, a new low since April; Citi has significantly lowered its gas price forecasts for this year and next; supported by domestic LNG costs, prices in North China are rising, with a year-on-year increase of over 50% in Northwest China; the No. 2 unit of the Datang Jinhua gas-fired power project is striving to be put into operation by the end of the month.

I. International Hot Topics

1. US-Iran Memorandum of Understanding Signed on June 19, TTF Plunge 18% in Four Days

The signing ceremony for the US-Iran Memorandum of Understanding is scheduled for June 19 in Geneva, Switzerland. Affected by this, European natural gas prices have continued to plummet. On June 16, Dutch TTF near-month futures fell more than 2.5% to €41.415/MWh, briefly touching €41.95/MWh, the lowest since May 7; UK natural gas futures fell 2% to 99 pence/sem. TTF has fallen a cumulative 18.2% in the past four trading days.

However, European natural gas prices are still about 30% higher than pre-crisis levels. Market doubts remain about the stability of the agreement, and it may take several weeks for shipping companies to regain confidence in the Strait of Hormuz. Qatar plans to rapidly increase LNG production after safe passage through the Strait of Hormuz is restored, but the extent of damage to its export facilities remains the biggest variable.

2. Citigroup Significantly Lowers Gas Price Forecasts

On June 16th, Citigroup released a report lowering its TTF average price forecast for the second half of 2026 to $12.4/MMBtu (approximately €37/MWh), and further to $9.2/MMBtu in 2027; JKM's target price for the second half of 2026 is $13.5/MMBtu, and $9.5/MMBtu in 2027; Henry Hub's target price for the second half of 2026 is $3.2/MMBtu, and $2.8/MMBtu in 2027. Citigroup believes that continued weak demand for LNG imports in Asia, strong hydropower in China, and increased water flow in Southeast Asia are key reasons for its bearish outlook.

3. US HH Holds Steady Around $3.14

On June 16th, NYMEX natural gas futures closed at $3.147/MMBtu, a slight increase of 0.9% on the day. Mild weather forecasts reduced expectations for cooling demand in late June, and the US-Iran ceasefire agreement had minimal impact on US domestic gas prices. Citigroup forecasts HH's average price at $3.2/MMBtu- in the second half of 2026.

4. Global Inventory Data Overview

II. China Hot Topics

1. Domestic LNG: Prices Rise in North China, Surge Over 50% Year-on-Year in Northwest China

On June 16th, the spot price of liquefied natural gas (LNG) was 6328 yuan/ton, up 6 yuan/ton from the previous day.

Northwest LNG: 5826 yuan/ton, up 0.12% month-on-month, a staggering 50.97% year-on-year.

Bohai Rim LNG: 6621 yuan/ton, down 0.14% month-on-month, up 44.97% year-on-year.

North China Market: The mainstream receiving price in Hebei was 6400 yuan/ton, up 54 yuan/ton from the previous day; in Shandong, it was 6465 yuan/ton, up 65 yuan/ton. Average ex-station prices at receiving terminals increased, and shipments remained limited. Although downstream demand was weak, cost support combined with tight supply drove prices further upward.

East China Market: The mainstream receiving price in Jiangsu was 6749 yuan/ton, and in Zhejiang, it was 6640 yuan/ton, remaining generally stable.

Sichuan-Chongqing region: Daily price 6373 yuan/ton, up 0.66% month-on-month.

2. Raw material gas costs remained high in the second half of June. 

PetroChina's raw material gas prices for liquefaction plants in the second half of June were: 4.005 yuan/cubic meter in western and northern regions, and 4.035 yuan/cubic meter in Sichuan, Chongqing, and Guizhou. This translates to a plant production cost of approximately 6500-6600 yuan/ton, basically in line with current mainstream ex-factory prices, leaving extremely limited profit margins for liquefaction plants. Cost support is the core driver of the current price increase in North China.

3. National Bureau of Statistics: Natural gas production by large-scale industrial enterprises reached 111.7 billion cubic meters from January to May. 

Data released by the National Bureau of Statistics on June 16 showed that natural gas production by large-scale industrial enterprises reached 111.7 billion cubic meters from January to May, a year-on-year increase of 1.7%. Electricity generation by large-scale industrial enterprises in May reached 784.3 billion kilowatt-hours, a year-on-year increase of 4.2%.

4. Datang Jinhua Gas-fired Power Project Unit 2 Aims for End-of-June Commissioning

The Datang Jinhua natural gas power project is one of the first batch of 9H-class gas turbine power generation projects in Zhejiang Province. Unit 2 is undergoing intensive commissioning, striving to commence power generation by the end of June. The project boasts advantages such as rapid response, low energy consumption, and environmental friendliness. Unit 1 was commissioned at the end of 2025. After Unit 2 is operational, the overall annual power generation is expected to exceed 3 billion kWh, undertaking grid peak-shaving functions and providing heating for the industrial park. This was reported in the previous issue; there are no new developments today.

5. Coal-to-Gas and LNG Storage Projects Continue to Advance

The first phase of the Inner Mongolia Huaxing New Energy 4 billion cubic meter/year coal-to-natural gas project has launched bidding, including two major sections: foundation treatment and testing, and chemical zone supervision, indicating that the project is about to commence.

The general contracting project for the construction of supporting facilities for the Hefei (Lujiang) LNG emergency peak-shaving and storage station has officially commenced, marking the entry of Anhui Province's key energy supply project into the substantive construction phase.

III. Company Updates

ENN Natural Gas: On June 16, Fitch Ratings affirmed its Long-Term Foreign-Currency Issuer Default Rating at "BBB" with a "Stable" outlook.

PetroChina Natural Gas Sales Company: Held a publicity and consultation event for "Work Safety Month" in Kunming on June 16.

Binzhou Municipal Government and China Oil & Gas Group signed a government-enterprise cooperation agreement in Qingdao.

Shouhua Gas shares fell 1.51% to close at 18.96 yuan/share on June 16; Jiufeng Energy fell 3.08%; Shaanxi Natural Gas fell 2.22%.

IV. Institutional Views

Citibank (June 16): Significantly lowered price forecasts for TTF, JKM, and HH for 2026–2027. Projected average prices are $12.4/MMBtu (approx. €37/MWh) for TTF in the second half of 2026 and $9.2/MMBtu for 2027. Weak Asian LNG import demand and strong hydropower generation in China were cited as key bearish factors.

Soochow Securities (Research report dated June 16): As of June 12, week-on-week price changes for US HH, European TTF, East Asian JKM, and Chinese ex-factory/landed LNG were +1.2%, -3.6%, +0.4%, +0.9%, and -6%, respectively. European gas inventories stood at 493 TWh (47.7 billion cubic meters), down 101.4 TWh year-on-year; the storage utilization rate was 43.59%, down 8.8 percentage points year-on-year.

V. Risk Warnings

Agreement Implementation Risk: While the contract signing is imminent (scheduled for the 19th), shipping companies require time to regain confidence in resuming passage through the strait, and the pace of production resumption in Qatar remains uncertain; thus, the agreement's conclusion does not equate to an immediate restoration of supply.

Tight Window for European Stockpiling: Storage levels stand at only 44.72%—down 8.8 percentage points year-on-year—maintaining pressure to replenish inventories.

Domestic Cost-Demand Tug-of-War: Feedstock gas costs remain high at 4.0 yuan per cubic meter, severely limiting profit margins for liquefaction plants. Should end-user demand remain sluggish, some plants may face pressure to cut production.

Risk Associated with Citi’s Bearish Forecast: Citi has significantly lowered its gas price forecasts; if their assessment proves accurate, the global benchmark for gas prices could undergo a systemic downward shift.