China spot LNG prices to remain stable on balanced supply/demand

SINGAPORE (ICIS)–China’s spot liquefied natural gas (LNG) prices are expected to stay stable in the coming weeks as major producers have been cutting production to avoid oversupply, industry sources said on Thursday.

Some producers have suspended production since early June and some others are planning to do so in the next couple of weeks, in response to weak demand from both households and industries, especially power plants, they said.

Three producers – Inner Mongolia-based Xingxing Energy, Dazhou Huixin Energy and China Natural Gas Guang’an – have shut their LNG plants and will not resume operations until July, according to company sources.

The three producers each have a LNG capacity of 1m cbm/day.

Four other producers with a combined capacity of 2.6m cbm/day will start maintenance shutdowns from late June or early July, company sources said. The four producers are Xinjiang Guanghui, Jiangyin Tianhe Gas, Henan Green Energy High-Tech and Xi’an City Xilan Natural Gas Group.

Such production losses will reduce supply and thus rebalance the market from an oversupply, industry sources said.

“That in turn will prevent prices from sliding down,” said a north China-based producer.

Spot LNG were traded at yuan (CNY) 4,800-5,300/tonne ($755-833/tonne) in the Yangtze River Delta and CNY5,250-5,450/tonne in the Pearl River Delta on 25 June, unchanged from early June, according to C1 Energy, an ICIS service in China.

Most traders expect July contract prices of imported LNG to be flat on June levels.

($1 = CNY6.36)

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