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COVID-19 hits LNG demand

Published by , Editorial Assistant
Hydrocarbon Engineering,

LNG demand in 2020 from the world’s three largest importers is now set to fall year on year, ICIS forecast today.

  • Chinese 2020 imports to fall to 58.1 million t, down 5.2% year on year.
  • Japanese 2020 imports to fall to 76.2 million t, down 1.1% year on year.
  • South Korean 2020 imports to fall to 38.5 million t, 4.7% down year on year.

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.

“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”, said 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.”

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.

Chinese LNG demand for 2020 is forecast at 58.1 million t, a drop of 3.2 million t on cargo arrivals in 2019. In the first three months of 2020 imports have already fallen 4.6% compared to the same period a year earlier. ICIS expects further declines over the year as gas inventories fill.

The world’s largest importer, Japan, is now forecast to receive 76.2 million t of LNG in 2020, down from 77.1 million t in 2019. During 1Q20, the country’s LNG imports were already down 2.6% year on year at 21.6 million t, indicating a revival later in the year.

ICIS forecasts South Korean LNG imports this year will fall by 1.9 million t to 38.5 million t. 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 t of LNG, which was 51% of the 354 million t that was imported globally.

ICIS’ LNG demand forecast covers the rolling 24-month horizon, on a monthly granularity.

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