China’s LNG producers withdraw price hike amid buyer resistance

05 November 2012 06:04  [Source: ICIS news]

SINGAPORE (ICIS)--Most Chinese producers of liquefied natural gas (LNG) have given up their attempt of raising prices, because buyers are resisting cost increase and demand has not shown any significant growth, industry sources said on Monday.

With the start of cold winter in China’s northern regions in early November, many LNG producers were trying to hike their prices as they believed that heating utilities demand would give a sufficient support.

However, demand on spot LNG has failed to grow much because piped gas supply is sufficient to meet the rise in utilities demand, according to industry sources.

Moreover, freight rates for LNG truck delivery has increased because of insufficient transport capacity, which made it more difficult for producers to raise their prices, some LNG producers said.

“We raised our October LNG purchases just in preparation for the winter consumption peak. This is not equal to rising consumption in the downstream sectors,” a south China-based LNG buyer said.

“We are not willing to accept higher offers from producers as our cost has already risen on the back of higher transportation charges. And, LNG supply is ample now,” the buyer added.

LNG ex-works prices are likely to increase in the second half of November, if real downstream demand grows in line with falling temperatures nationwide, a separate trader based in south China said.

By: Rebecca Qian

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