China’s LNG transactions weaken amid bearish sentiment

31 January 2013 04:50  [Source: ICIS news]

SINGAPORE (ICIS)--China’s liquefied natural gas (LNG) trading market has weakened since late January amid falling prices and a strong bearish sentiment in downstream sectors, traders said on Thursday.

Domestic LNG producers based in north and northwest China have been reducing their EXW (ex-works) prices by more than yuan (CNY) 200/tonne ($32.20/tonne) since 25 January, they said.

One LNG supplier in north China, for example, offered its volumes at CNY3,900/tonne on 30 January, versus CNY4,200/tonne on 25 January, added the traders.

The price drops were attributable to decreasing downstream demand and rising domestic production, the traders explained.

“Demand from end-users has declined significantly when power companies and industrial users halted operations ahead of the Chinese Lunar New Year holiday on 9-15 February, and some large gas companies also stop purchasing LNG,” one trader based in south China said.

“The market is likely to remain weak on the demand side until 24 February,” the trader added.

Meanwhile, domestic LNG supply grew in line with rebounding operating rates.

The average utilisation rate of China’s liquefaction facilities was 60% on 29 January, versus 58% on 25 January, according to data compiled by ICIS C1 Energy.

Therefore, downstream consumers chose to stand on the sidelines and hold their purchasing, expecting that LNG prices will continue declining in the near term, the traders said.

($1 = CNY6.22)

By: Jane Han

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