China LNG producers raise prices on tight supply

13 December 2012 09:40  [Source: ICIS news]

SINGAPORE (ICIS)--China’s liquefied natural gas (LNG) producers have raised their spot offers this week in view of declining supplies and increased feedstock prices, market sources said on Thursday.

On 11 December, the average LNG ex-works (EXW) prices were at yuan (CNY) 3,930/tonne ($629/tonne), up by CNY212/tonne from the start of the month, according to C1 Energy, an ICIS service in China.

A number of domestic LNG producers had to reduce or even halt production amid a shortfall of feedstock natural gas, consumption of which peaks during the winter months, market sources said.

The Chinese government mandates the prioritization natural gas use for heating purpose in the residential sector during the winter season.

At the liquefaction plants, cost of production went up after PetroChina’s Changqing Oilfield implemented a 10% price hike for natural gas supplied to LNG plants starting 1 November, leading to higher ex-works prices of LNG, said a PetroChina source.

The price hike was not reflected in the downstream markets until 11 December, industry sources said.

LNG demand is firm, particularly coming from the northern region where temperatures are falling.

China’s domestic LNG supply is expected to decline further in the near term amid rising piped gas consumption and falling gas supplies to liquefaction plants, the market sources said.

Many domestic suppliers are planning to raise their EXW prices again in the second half of December, they said.

($1 = CNY6.25)

By: Jane Han

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