A massive surge in the cost of liquefied natural gas in the midst of the Russia-Ukraine war has caused gas-consuming businesses like refineries, power plant, petrochemicals and small and medium enterprises to slice production or search for other fuel choices to run their plants.
The cost of LNG in the spot market hopped from $6 per million metric British thermal unit (mmbtu) in January 2021 to $35 in January 2022, and it has since been exchanging in the $30-$38 scale.
Small and medium factories which are on depending gas (LNG) and does not have a long-term contract with the suppliers are the worst affected. India’s ceramic hub, Morbi, the Gujarat town known for manufacturers of tiles and sanitaryware have cut down on consumption of gas, which has impacted their production and forced a few units to close shop.
“Gas prices have shot through the roof, making 50 percent of factories in our area shut operations,” informs KG Kundariya, Chairman of the Win-tel Group and former President of the Morbi Ceramics Association. He adds, “If the situation does not improve in the next quarter, it will be detrimental for our sector”.
