China’s Gas Shortage Spreads South With BASF Halting Production in Chongqing

China’s Gas Shortage Spreads South With BASF Halting Production in Chongqing

Tang Shihua

Date: Wed, 12/13/2017 - 16:17 / source:Yicai
China’s Gas Shortage Spreads South With BASF Halting Production in Chongqing
China’s Gas Shortage Spreads South With BASF Halting Production in Chongqing

(Yicai Global) Dec. 13 -- German chemical giant BASF temporarily halted operations at its MDI plant in Chongqing yesterday due to a lack of natural gas as the government diverted supplies to deal with a continued shortage in Northern China.

BASF has not provided a schedule for restarting operations at the facility in central China’s Chongqing municipality, where it uses natural gas as a key raw material for making MDI, used in polyurethane products, online news outlet The Paper reported.

Natural gas supply in China is tight at present due to efforts to reduce environmental pollution. The government is pushing ahead with a switch from traditional coal to gas as the source of heating for the north of the country, resulting in a shortage that is now spreading south.

Major state-run oil firm China National Petroleum Corp. (CNPC) and China Petroleum & Chemical Corp. (Sinopec) [SHA:600028] recently called on chemical fertilizer makers in southwestern Sichuan province and Chongqing to halt production from Dec. 8 to guarantee a stable gas supply in northern areas, Shanghai Securities News reported.

In addition to Sichuan and Chongqing, companies in southwestern Yunnan province are also reporting that the gas shortage is affecting operations. Yunnan Yuntianhua Co. [SHE:600096] stopped production at a plant with annual output of 500,000 tons of ammonia and 800,000 tons of urea on Dec. 11 and does not expect to resume gas-based operations until the end of the month.

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Keywords: MSCI, commodity, Supply Shortage, BASF, Southwest China, Winter Heating, Smog Reduction