Gas-supply shortage forces ceramic firms to limit production.
10 Dec 2017/CTW
In China, winter is the heating season which make Chinese government and industries face the challenge to ensure sufficient supply of natural gas. Currently, many municipal governments begin to implement the emergency plan for natural gas security. Then guideline of the plan is to ensure gas supply to residents by disconnecting gas supply to industrial companies and limiting gas supply to commercial companies. Since 2016, Shanxi, Hebei, Henan, Guangdong, Shandong, Sichuan have proceeded the project of changing coal to gas. So basically, many ceramic production bases have already used gas as fuels. Now, the gas-supply shortage leads to rising gas prices. Cost pressures force many ceramic companies to limit their production or stop production directly. Hebei Ceramic companies stop production due to severe gas-supply shortage. On October, the gas price in Hebei province has already been increased. On 15th November, Hebei entered the heating season. So, the gas price rose to 3.5 yuan/m³ and the LNG price was close to 4 yuan/m³. On 28th November, the pressure of gas pipe network lowered from 4 kg to 0.5 kg. So, the government launched the emergency plan to disconnect gas supply to industrial companies. The plan will remain open until further notice. Shandong Ceramic companies take turns to produce tiles. Since 2016, ceramic companies in Shandong Zibo have started to replace coal with gas. In November, the time when Zibo entered the heating season, the gas price in Zibo has been pushed up by 0.6 yuan/m³, up more than 24%. At the beginning of this month, the gas price has increased from 2.45 yuan/ m³ to 3.03 yuan/m³ due to the short supply. Therefore, the ceramic companies could not run at full capacity. Now, they decided to take turn to produce ceramic tiles. Sichuan Gas price rose by 10%, some ceramic companies stop production beforehand. At the beginning of this year, Jiajiang government required all ceramic companies to change their fuel from coal to gas. Now, for the companies that use 10 million m³ per year, the gas price rises from 1.75 yuan /m³ to 1.95 yuan /m³. And for the companies that use 5 million /m³ per year, the gas price increases from 2.05 yuan/m³ to 2.25yuan /m³. In this condition, some ceramic companies held on to only one production lines. Henan &Shanxi To deal with air pollution, ceramic companies using gas also stop production. On 28th November, the Department of environmental protection of henan province launched the emergency notice to deal with the heavy air pollution. On 30th November, more than 20 cities in Hebei, Shanxi and Henan have issued or extended an orange alert for air pollution. On the same day, 10 cities in the central and middle part of Hebei launched the regional II Emergency Response. It is expected that 18,000 companies will take peak production and stop production to reduce emissions.
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