Since 2016, the ceramic companies in Zibo production base have started to replace coal with gas as their fuels. In November this year, as Zibo entered the heating season, their production of ceramic tiles started to be affected by the gas-supply shortage severely.

On 4th December, the price of natural gas increased from 2.45yuan/m³ to 3.03yuan/m³. Actually, it was the third that the price had rose. The first time was in 8th October, the day when the ceramic companies started to limit their production for a week. And the second time was in 18th November. Actually, since 8th October, the ceramic companies has started to face the short supply of natural gas. 

It has been released that the increasing price of natural gas is caused by the rising price of liquefied natural gas(LNG). As the price of LNG continues to grow, the ceramic companies have to face the cost increases. Some of them are preparing to stop their kiln beforehand.  

A representative of a ceramic company said, currently, the price of LNG has increased to 8500 yuan/ton. In other words, the price of LNG was around 5.86 yuan/m³. However, the ceramic companies got LNG at a price of 5.96 yuan/m³, which is a doubling of natural gas. As a result, some ceramic companies chose to use a combination of LNG and natural gas, which were evenly split, to have better control of production costs. 

“But as the price of LNG continues to grow, The long-running trend of increasing prices of LNG will push up our production costs in natural gas.” At present, the average price of natural price increases to 4.5 yuan/m³.Therefore, the production costs of producing a ceramic tile in 300×600(mm) will grow by 0.6 yuan. Now, some ceramic companies are just producing tiles at a loss as they do not want to delay the customers’ orders. 

But many other ceramic companies has decided to limit their production or even stop production beforehand. “Now, our company is limiting production. After we restart the production, the price of natural price may increase to 4.8 yuan/m³.”an insider said. 

Though the price of natural gas has been increased for several times, the natural gas is still in short supply. Therefore, ceramic companies could not gain enough natural gas to support their production. Anyway, as the real consumption peak of natural gas is yet to come, the production of ceramic companies may be further affected in the future.