Coronavirus to further depress global LNG markets Report

Insight 10 February 2020

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Report summary

The World Health Organization (WHO) has announced that the novel coronavirus (2019-nCoV), is now a ‘Public Health Emergency of International Concern’. Aside from the mounting human and economic cost within China, there is also a material impact to global gas and LNG markets. The impact to Chinese gas demand will depend largely on how widespread the disruption is, and ultimately how long the outbreak takes to contain. We estimate between 6 bcm and 14 bcm reduction in 2020 annual gas demand using a ‘best case’ and more ‘prolonged case’ scenario, but there is further downside risk if travel restrictions are extended and if other Asian markets start implementing quarantine measures. We estimate Chinese LNG demand could be between 2.5 Mt and 6.3 Mt lower than our previous forecast and this will create a sustained drop not only in North Asian LNG prices, but also at European and US gas hubs prices.

Executive summary
Pressure on the economy could drive down gas demand
What will be the magnitude of gas demand loss?
Trucking restrictions create additional constraints for LNG
Disruptions weighs the most on LNG demand
An over-supplied global LNG market prepares for the worst
Further reading
Appendix I: Economic impact
Appendix II: Comparisons to 2003
Appendix III: LNG contracts under force majeure

Tables and charts

This report includes 12 images and tables including:

Regional gas demand vs Coronavirus
China’s 2020 gas demand outlook
Demand changes versus pre-coronavirus outlook by sector

Demand changes versus pre-coronavirus outlook by month
Supply loss: best case
Supply loss: prolonged case
Wood Mackenzie 4Q 2019 LNG Short Term APAC outlook, prior to Novel coronavirus impact
Cumulative number of reported SARS cases by week from mid-March to mid-July 2003
China’s gas market size and LNG imports
Contracted LNG by Seller (2020, ACQ, mmtpa)
Forecast Imports vs Contract ACQ
LNG contracts to China (2020)