India's Gujarat Gas raises PNG prices in Morbi cluster

Market: LPG, Natural gas
13/12/24

India's state-run city gas distribution company Gujarat Gas has increased prices of piped natural gas (PNG) in the Morbi industrial cluster in west India's Gujarat state.

This came after it kept rates unchanged since July. Prices of PNG used in the industrial ceramic cluster have been hiked to 46.95 rupees/m³ ($0.55/m³) from Rs44.68/m³ in July. This comes to Rs5.60/kcal on an energy equivalent basis, based on a calorific value of 8,400 kcal/kg.

This is slightly higher than propane prices, which is a competing fuel in the region's ceramic cluster.

Propane prices in Morbi were pegged at Rs61/kg for December, up from Rs60.30/kg in November because of rising import costs. Propane on an energy equivalent basis is Rs5.50/kcal based on the calorific value of 11,100 kcal/kg, traders said.

Gujarat Gas has regained some market share in the last few months by keeping its prices unchanged. But it remains to be seen if ceramic units in the region will switch back to propane again.

Propane demand in the region fell to 3.2mn m³/d in November from 4.5mn m³/d in October, regional traders said. Overall gas demand in the region was 7mn m³/d in November.

Capacity utilisation of ceramic clusters continues to remain weak because of lower export demand for the upcoming Christmas season in the west, according to traders in the region.

Gujarat Gas competes with regional propane distributors, including state-controlled IOC, BPCL and HPCL, as well as private-sector firms Reliance Industries, Aegis Logistics and Gogas.

It remains to be seen if propane prices will rise further next month, as Saudi Arabia's state-controlled Aramco kept its December propane contract price unchanged at $635/t.

Spot LNG prices have also risen this month, which makes a fall in PNG prices unlikely.

The Argus-assessed spot price of LNG delivered to India's west coast for first-half January stood at $14.09/mn Btu on 12 December, up from $12.70/mn Btu a month earlier for December-arriving vessels.

Tile manufacturers in Morbi have been switching between PNG and propane depending on LNG import prices, since the latter rose in 2022 as a result of the Russia-Ukraine war.

By Rituparna Ghosh

Propane vs PNG prices (Indian rupees/kcal)

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