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    Chinese Trucked LNG Prices Hit 3-Year High: WoodMac


Trucked LNG prices are highly sensitive to market balance, especially in winter when the supplies act as an important peak-shaving source, WoodMac said.

by: Shardul Sharma

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Natural Gas & LNG News, Asia/Oceania, Liquefied Natural Gas (LNG), Security of Supply, Infrastructure, News By Country, China

Chinese Trucked LNG Prices Hit 3-Year High: WoodMac

Spot prices of trucked LNG in China hit three year high recently thanks to strong gas demand and a severe cold spell, Wood Mackenzie said in a note published on January 12.  

Delivered price indices in Hebei, southern Jiangsu and southern Guangdong almost doubled in just three weeks. In Hebei and Jiangsu, spot prices reached around yuan 10,000/mt ($28/mn btu) on December 21, the highest since December 2017, WoodMac said. Prices then dropped sharply, only to increase again when another cold spell hit the country in late December, although failing to reach the previous week's peak.  

 "The price spike came as a huge surprise to market participants. Before winter started, consensus was that there would be a well-supplied market with subdued trucked LNG prices, as was the case for most of 2020,” WoodMac research director Miaoru Huang said. “As a result, trucked LNG supply had been tightened to make room for piped gas in the current winter season."  

Trucked LNG makes up less than 20% of China's total gas demand annually. However, its prices are highly sensitive to market balance, especially in winter when it acts as an important peak-shaving source.  The winter gas demand has been accelerating due to strong economic recovery, household coal-to-gas switching, relaxed gas allocation to non-prioritised sectors and cold snaps, WoodMac said.   

Huang added that the tightness in December is unlikely to result in much upside in LNG demand imports in December and January.  

“There is not enough time for LNG importers to secure prompt supply. Through curtailing demand and mobilising domestic supply, China would be able to ease demand pressure to some extent,” Huang said. “The main LNG importers – NOCs [national oil companies] that have adjusted their winter gas contracts – are not obliged to meet all peak demand.”