Northern China LNG producers cut prices to boost sales

11 May 2012 09:39  [Source: ICIS news]

SINGAPORE (ICIS)--Liquefied natural gas (LNG) producers in northern China have achieved faster sales in the past few weeks through prices cuts giving them an edge over imported cargoes in the domestic market, industry sources said on Friday.

Most LNG producer in north China reduced their prices to yuan (CNY)3,800/tonne ($602/tonne) ex-work (EXW) for May delivery, equivalent to CNY5,550/tonne delivered (DEL) to southern China, the key market, according to market sources.

In comparison, Shenzhen Dapeng, the major south China-based trader of imported LNG, offered its products at CNY5,476/tonne EXW for May-lifting, approximately CNY5,600/tonne DEL, those sources said.

Consumers in south China therefore chose to buy the cheaper domestic LNG to save costs, boosting sales of producers in northern China, producers said.

“LNG sales have been rebounding and stocks have been depleting in the past week after we lowered our offers,” a north China-based producer said.

Producers in north China’s Inner Mongolia have offered their products below CNY3,800/tonne EXW, which means bigger discounts against imported cargoes, markets sources said.

Sales of imported LNG in south China has been squeezed to around 40 trucks a day for Shenzhen Dapeng and 70-80 trucks a day for Fujian Putian at present, traders said. 

Before the flocking of domestic cargoes from northern areas, Shenzhen Dapeng and Fujian Putian could deliver over 50 and 100 trucks of cargoes a day, respectively, according to the traders.

The price advantage of domestically produced LNG over imported volumes is likely to continue in the near term, as the prices of imported LNG are adjusted only once each month, market sources said.

($1 = CNY6.31)

By: Rebecca Qian

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