Affected by the Lunar New Year holiday, South China's LNG sales by truck from coastal terminals presented a downtrend in January due to decreased domestic demand. However, imported LNG sales were expected to improve in February, as downstream demand started to show signs of a revival after the holiday, learned from OilChem.
South China's LNG terminals sold around 6,143 trucks of LNG in January, down 71.42% from a year earlier, data from OilChem showed.
In addition to the Lunar New Year holiday, lower domestic LNG price than imported LNG pricewas another factor that led to the poor market demand in January. Imported LNG ex-terminal price of South China's CNOOC Zhuhai Jinwan LNG terminal averaged Yuan 7,500/t by January 31, while domestic LNG ex-work price of Southwest China's Sichuan province was just Yuan 5,600/t, according to OilChem's data.
The huge arbitrage stimulated demand for domestic LNG and put pressure on LNG terminals in South China, which adjusted its sales policy on February 1 by reducing the price by Yuan 400-500/t, OilChem's data showed.
However, with companies and factories resuming operations after the Lunar New Year holiday, OilChem expects LNG sales by truck from South China's coastal terminals will increase in February, underpinned by a steady recovery in downstream industry and rising domestic LNG price on high feed gas auction price.
Taking downstream steel industry as an example, operating rate of cold rolled steel sheet and coil in South China was 75.00% as of January 27, which was the same as last week, and that of hot rolled steel sheet and coil was 84.62%, up 7.7 percentage points from the previous period, according to data from OilChem.
Written by Sunny Fang, fss@oilchem.net
Edited by Navy Liu, navy@oilchem.net