Gas sales volume growth accelerated for rated Chinese city-gas operators in 4Q20 and 2021 year to date due to a post-pandemic industrial production recovery and strong heating needs amid one of the coldest winters in decades, Fitch Ratings said.

This partly offset the pressure on dollar margins, which were probably lower in 2H20 from 1H20, supporting the sector’s steady profitability.

The Chongqing Petroleum and Gas Exchange said the apparent natural gas consumption growth accelerated from 5.9 percent in October 2020 to a low-teen percentage in November 2020 to January 2021.

The spot liquefied natural gas (LNG) price increased by more than 100 percent in northern China and 60 percent in southern China since November. The LNG price in Hebei, Jilin, Liaoning, and Shandong provinces rose to more than CNY10,000 per tonne in late December, from an average of CNY2,700 per tonne in June-August 2020.

We think China’s gas supply pressure is lower this winter than in 2017. As a result, we believe the spike in gas demand can be fulfilled to a large extent, translating into strong gas sales volume growth for rated gas distributors.

The Chinese government pushed national oil companies (NOC), local governments and gas distributors to construct additional gas storage facilities after the 2017 gas shortage, and supply from these facilities reached above 100 million cubic metres per day, accounting for 9.7 percent of total daily gas consumption in the peak season this winter.

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25th January 2021