Asian spot prices for liquefied natural gas (LNG) fell this week as the heavily oversupplied market was pressured by concerns over the impact of the coronavirus outbreak on China’s imports.
The average LNG price for March delivery into northeast Asia was estimated at around $3.80 per million British thermal units (mmBtu), down $0.20 per mmBtu from the previous week. With demand across Asia subdued this winter due to warmer-than-usual weather, concerns are growing that the coronavirus may further taper off gas consumption.
“Any slowdown in Chinese GDP growth as a result of the coronavirus will feed directly into gas consumption and through to LNG imports,” Michael Stoppard, chief strategist for global gas at IHS Markit said.
“This will hurt a global market already in search of demand support.”
China Council for The Promotion of International Trade (CCPIT) has said it will offer force majeure certificates to companies struggling to cope with the impact of the virus on their business with overseas partners.
“We are more concerned about the Wuhan virus than the spot market right now,” a source in China said earlier this month. With warm weather keeping storage levels high, a fall in downstream demand would easily lead to a so called tank-top situation at Chinese ports, an LNG analyst said.
As the Lunar New Year holidays in China were extended until the end of this week due to the virus outbreak, market activity was quiet across the whole of Asia, LNG market sources said.
On the supply side, there was a tender from Indonesia’s Donggi-Senoro plant that offered an LNG cargo for loading or delivery in March. In the Atlantic basin, Angola LNG project is selling a cargo for delivery between the end of February and mid-March.
Russian producer Novatek has sold a cargo for late March in Europe, while Nigeria LNG awarded its tender for two February loading cargoes, industry sources said.
India’s demand is growing due to the low prices, a buyer in India said.
Gail India and Torrent Power awarded their tenders this week at below $4 per mmBtu, he added.