Surging heavy-duty LNG truck sales boost LNG consumption in China

The sales of heavy-duty LNG trucks in China skyrocketed in 2024 due to attractive LNG prices, which boosted the LNG consumption especially from the transport sector, in addition to the GB VI emission standard fully taking effect on July 1 2023, according to OilChem.

China's LNG apparent consumption reached 12.23 million tonnes in the first four months of 2024, an increase of 35.52% from a year earlier, data from OilChem showed, mainly driven by the demand growth from the transport sector.

Source: OilChem

The vehicle LNG consumption, which took up 49.97% of domestic total LNG consumption, jumped 39.62 YoY to 6.11 million tonnes in the first four months, driven by hiking heavy-duty LNG truck sales in view of growing needs of cargo transportation and falling LNG prices.

Source: OilChem

From January to April, China's sales of heavy-duty LNG trucks surged 144.25% from a year earlier to 71,600 units, reaching the highest in nearly five years. Especially, the sales in March hiked 207.51% MoM to 29,300 units, jumping 252.93% YoY, the second high since 2019 and next only to 39,000 units in June 2019. And the sales in April came in at 26,400 units, a decrease of 10% MoM while surging 140% YoY.

The sales of heavy-duty LNG trucks were mainly clustered in the resource-based logistics and transportation provinces such as Hebei, Shanxi, Shandong and Henan, with the volumes of 13,500 unit, 11,900 units, 6,793 units and 6,269 units, respectively, accounting for 18.90%, 16.60%, 9.50%, and 8.80%. The sales in the four provinces took up 53.8% of the domestic total in the first four months of 2024.

Source: OilChem

The rise was mainly attributed to more attractive LNG prices than gasoil prices when domestic and imported LNG prices both dropped. Taking the truck transportation in North China's Tianjin City as an example, the freight has remained at Yuan 0.50/t per kilometer since 2022, and increased to Yuan 1.80/t per kilometer during the heating season due to robust demand.

Source: OilChem

Cost of Trucks using LNG vs Gasoil

Source: OilChem

Seen above, in 2023, the cost of a truck using LNG as fuels was only Yuan 170.17 per 100 kilometers, but that was as high as Yuan 231.78 for gasoil fuel, with a price difference of Yuan -61.61 per 100 kilometers between the two.

As of April 2024, the costs reduced to Yuan 153.27 per 100 kilometers for LNG and Yuan 224.31 per 100 kilometers for gasoil, with the price difference widening to Yuan -71.04 per 100 kilometers. Therefore, it can be said that LNG is more suitable for the logistics transportation industry to help carriers reduce transportation costs and maintain profits.

According to OilChem's calculation, the total ownership of heavy-duty LNG trucks in China from January to April was 753,800 units, 761,400 units, 786,800 units and 809,600 units, respectively, while the LNG apparent consumption was 2.78 million tonnes, 2.15 million tonnes, 3.59 million tonnes and 3.62 million tonnes. The correlation between heavy-duty LNG truck ownership and LNG apparent consumption was 0.82, showing a high positive correlation.

Source: OilChem

Based on the growth of 18.87% in the ownership of heavy-duty LNG trucks in 2023, it is estimated that the number of LNG heavy-duty LNG trucks will reach 900,000 units by the end of 2024, with an annual increase of about 150,000 units. If a truck consumes 35kg LNG per 100 kilometers, with an assumed average mileage of 60,000 kilometers for each, it will lift the LNG consumption by 3.15 million tonnes in 2024, approximately 9.48% of the apparent LNG consumption in 2023, bringing new momentum to the LNG market in China.

Written by Sunny Fang, fss@oilchem.net  
Edited by Aggie Hu, huchenying@mysteel.com