Coronavirus Hits Global LNG Demand, Q1 Imports Down

LNG demand destruction, caused by the impact of the coronavirus pandemic, will cause imports to be lower in China, Japan and South Korea this year, compared to 2019, according to an expert. “The forecast weakness in over half of the world’s LNG import market for 2020 will only exasperate the current oversupply and keep pressure on key natural gas and LNG prices,” stated ICIS LNG analyst Tom Marzec-Manser.

“While Japan and South Korea have been contracting as LNG markets for a few years, a shrinking Chinese market will cause major headaches for those producers looking to find demand for their increasing output,” he added.

Noticeably lower macroeconomic indicators have driven much of the downward revision from ICIS, which updates its LNG demand forecasts monthly and in response to market moving developments.

According to ICIS, Chinese LNG demand for 2020 is forecast at 58.1 million tons, a drop of 3.2 million tons on cargo arrivals last year.

In the first three months, imports have already fallen 4.6% compared to the same period a year earlier, it stated.

ICIS pointed out that it is expecting further declines over the year as gas inventories fill.

During the first quarter, the country’s LNG imports were already down 2.6% year on year at 21.6 million tons indicating a revival later in the year.

According to ICIS forecasts, South Korean LNG imports this year will fall by 1.9 million tons to 38.5 million tons.

While imports over the opening three months of the year have been sharply higher than a year earlier, this was largely driven by environmental policies that will have little impact over the rest of the year.

In 2019, China, Japan and South Korea collectively imported 179 million tons of LNG, which was 51% of the 354 MT tons that was imported globally.