MUMBAI: The steep 70 per cent spike in global liquefied natural gas (LNG) price is unlikely to curb domestic demand, but may crimp the margin of city gas distribution (CGD) companies to some extent as volume growth will support marketing margins, according to a report.
Over the past five to six months, LNG prices in Asia have increased by over 70 per cent, driven by rising Chinese imports. The spurt was also due to plant shutdowns and healthy demand from Japan, Korea, India and Pakistan, CrisilNSE -0.20 % said in a weekend note.
"But with crude prices breaching USD 75 a barrel, traders see an opportunity to price LNG in lockstep with crude. Earlier, there wasn't much correlation between crude and spot LNG prices," the report said.
It also noted that over the rest of this fiscal year, too, prices are expected to hold at USD 8-8.5/mmBtu for non- peak months and reach USD 10-10.5/mmBtu during the peak season even as supply is restored from plant turnarounds and incremental liquefaction capacity of 25 million tonne coming on stream.
Last fiscal, after stabilising at USD 8-8.5/mmBtu during the lean months (between May-June and September- October), Asian spot LNG prices peaked at USD 10-10.50/mmBtu, said Crisil.
"The Supreme Court banning polluting fuels like fuel oil and petcoke for industrial use in some northern states has been favourable for LNG demand.
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19 December 2018
20 December 2018