China’s LNG truck delivery shortage to worsen in H1 November

18 October 2012 10:48  [Source: ICIS news]

SINGAPORE (ICIS)--The delivery of liquefied natural gas (LNG) in Hebei province will be further disrupted because of China’s plans to tighten traffic controls during the 18th National Congress meeting next month, industry sources said on Thursday.

China’s LNG transport capacity has been tight since early October, when some trucks in central China’s Hubei province were not allowed on roads, a logistics company source in Hubei said.

Hubei-based drivers of trucks carrying hazardous petrochemicals are now required to complete a course on the safety of road transportation before getting on road following a crash accident of a liquefied petroleum gas (LPG) truck in Hunan province early this month, the source explained.

LNG transport capacity will be further tightened as stricter traffic controls will delay the transportation significantly, according to the traders.

The congress meeting, which is to be held on 8-15 November, will make the country’s once-a-decade leadership transition. For the major event, the country needs to impose stricter controls on traffic to facilitate the running of the event. Under the stricter traffic controls, trucks carrying LNG will be banned from entering highways in Beijing, Tianjin and Hebei during that week, traders said.  

There are more than 240 operational LNG trucks in Hubei, while the number is around 3,000 units in China, according to data compiled by ICIS C1 Energy, an ICIS service in China.

Some Hubei-based logistics companies had raised their freight rates for distances above 2,000km to yuan (CNY) 0.69/tonne ($0.11/tonne) per km, from CNY0.67/tonne per km in late September, the data also showed.

Transport capacity shortage and rising freight rates have weighed on the supply market of China’s domestically produced LNG, market sources said.

LNG suppliers in north and northwest China have been seeking hard for trucks to fulfill their contractual commitments, the sources said, adding that some of them offered higher prices for LNG delivery.

However, major LNG downstream markets showed little response because of ample piped gas supply, the sources added.

($1 = CNY6.26)

By: Jane Han

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