LNG producers in northern China cut prices on high inventory

09 October 2012 11:24  [Source: ICIS news]

SINGAPORE (ICIS)--Some producers of liquefied natural gas (LNG) in north and northwest China have reduced prices by yuan (CNY) 25-100/tonne ($4-16/tonne) under the pressure of high inventory levels, industry sources said on Tuesday.

Stocks have been piling up since late September when industrial demand fell during the Mid-Autumn festival and National Day holiday from 30 September to 7 October, the sources explained.

Meanwhile, LNG delivery from the northern production regions to the consumption hubs in south and east China was disrupted during the week-long holiday as many provinces implemented stricter traffic controls. For example, trucks carrying dangerous cargoes such as LNG are prohibited from running on highways in some provinces, the sources added.

Inner Mongolia-based Shitai Natural Gas Business, which operates a 300,000 cubic metres (cbm)/day liquefaction plant at Etuokeqian, cut its LNG prices by CNY100/tonne to CNY3,200/tonne EXW (ex-works) on 8 October from two weeks ago.

China’s Shanxi Yigao, which runs a 900,000 cbm/day liquefaction plant, lowered its prices by CNY30/tonne to CNY3,900/tonne EXW.

Most domestic LNG producers chose to keep their prices unchanged amid a wait-and-see sentiment, as LNG demand is expected to rebound in the near term when heating season starts in northern areas along with cooling weather, a northwest China-based LNG supplier said.

However, LNG EXW prices are unlikely to increase in October if upstream supplies rise significantly, a separate supplier in north China said.

Most suppliers which have their liquefaction plants shut plan to resume production in the near term, and those with plants under construction also plan for unit start-ups, the supplier added.

($1 = CNY6.29)

By: Jane Han

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