CNPC to Raise In-to-plant Price in Northwest China

CNPC noticed all LNG reliquefaction plants using PNG as feedstocks that the in-to-plant price rose by CNY 0.2/cbm to CNY 2.08/cbm (CNY 3,016/mt or $8.48/mn Btu) for basic quality, and that for incremental quality rose to CNY 3/cbm (CNY 4,350/mt or $12.23/mn Btu). The new price policy implemented immediately as announced on August 10, 2018, and CNPC requested all relevant clients to renew contracts as soon as possible.

CNPC exerted harsh supply policy to LNG plants in 2018, from 2017-18 winter heating season’s severe restriction to several rounds of supply cut in off-peak season. According to sources at plants, the supply cut was maintained at around 50%-60%, deeply impacting the industrial overall operation rate. Meanwhile, the environmental protection supervision further suppressed the downstream demand, whilst the higher-than-average LNG prices hurt buying interests and potentials at all levels. All in all, when rising cost met with mild demand, LNG participants in Northwest China and neighboring areas faced an embarrassed market situation. It is expected that the LNG price will inch up due to the rigid cost pressure in a medium term, but the buyingwill remain weak until the winter heating season.