Kasikorn Securities (KS) discusses significant developments in the utilities and electronics sectors as Iran launched missile attacks on Ras Laffan Industrial City, the largest LNG (liquefied natural gas) hub in Qatar, causing severe damage to gas processing plants.
As a result, it is estimated that Qatar’s LNG production capacity has been reduced by around 17%, equating to roughly 12.8 million tons or about 3% of the global supply. Reports indicate that repairs could take between three to five years, leading to an immediate tightening of the global natural gas market. This has pushed up the price of JKM LNG by 11% on Friday, reaching approximately $22.
In addition, the attack has also affected exports of other energy products: condensates are down 24%, LPG by 13%, helium by 14%, and naphtha by 6%.
Kasikorn views this situation as negative for the power plant sector, as the higher LNG prices will increase electricity generation costs and squeeze profit margins for companies such as GPSC and BGRIM.
The Thai government has capped electricity tariff rates until August. Should LNG prices remain at current elevated levels through year-end, profits at GPSC and BGRIM could be impacted by as much as 40-50%. Given these risks, the brokerage believes that GULF remains a safer option in the sector, as it is less exposed to these shocks.
The electronics sector is also expected to be negatively affected. Rising electricity costs could lead to higher production costs for factories in both Europe and Asia, potentially resulting in production line shutdowns. Furthermore, helium, of which Qatari exports have been curtailed, is a critical gas in semiconductor manufacturing—especially in cooling lithography machines.
This could force chip manufacturers to scale back production, resulting in further supply chain disruptions. Kasikorn notes that this would impact companies such as DELTA, HANA, and KCE. Beyond the rising production costs, there is also the risk of further disruptions affecting customer demand.
