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China lowers incremental gas price to merge city gate prices
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On Feb 28 the NDRC announced that incremental and existing city gate gas prices will be merged. Although we were anticipating a decision on gas pricing, the scale of the decrease of around 15% in the incremental prices is not commensurate with the fall in oil prices, despite city gate prices ostensibly being linked to a basket of LPG/Fuel Oil. China’s government is trying to balance stimulating demand against continuing to encourage investment, however we expect limited upside to demand in 2015.
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