A growing natural gas shortage in China is now disrupting the country’s chemical output.
One of China’s major chemical companies, Yunnan Yuntianhua Co., said it has been forced to suspend production of synthetic ammonia and urea because supplies of natural gas are being diverted to heat homes in other parts of the country.
According to ICIS News, an increasing number of companies have shifted away from coal in the last year, which has increased demand for natural gas. Poor energy infrastructure has also contributed to the current shortage.
The National Energy Bureau estimates that the gas deficit will be 10-20 percent of the total needed. As the crisis deepens, residential customers are being given preferential treatment over manufacturing or commercial sectors.
Yunnan reported this week that it has halted production at a 500,000-ton per year ammonia plant and on an 800,000-ton per year urea line that both use natural gas as a feedstock. The company expects to lose about $3.78 million due to the production disruption.
“Gas producers have suspended gas supplies to major industrial consumers in southwestern regions. Our Shuifu plant will temporarily halt production of two chemicals as a result,” the company stated.