Coronavirus to further depress global LNG markets

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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.

Table of contents

  • 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)

What's included

This report contains:

  • Document

    Coronavirus to further depress global LNG markets

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