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Chinese industrial gas demand experiencing sharp decline

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LNG Industry,

Reuters is reporting that industrial gas demand in Northern China is experiencing a sharp decline as small factories are receiving fewer export orders.

The reduced number of orders being placed is due to increased costs associated with the country’s recent pollution control policies. Hundreds of the small factories affected have been forced to close.

As spot orders from these factories become scarcer, several LNG buyers in China are attempting to re-negotiate existing LNG purchase contracts with the country’s top supplier China National Offshore Oil Corporation (CNOOC). These contract negotiations are taking place a mere six months since the deals were first signed.

This unexpected and significant drop-off in gas demand from a key industrial area could lead to Asian LNG spot prices declining further than their already low levels.

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