LNG demand in 2020 from the world’s three largest importers is now set to fall year on year, ICIS forecasts.
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,” says 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 tonnes, a drop of 3.2 million tonnes 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 tonnes of LNG in 2020, down from 77.1 million tonnes in 2019. During Q1 ‘20, the country’s LNG imports were already down 2.6% year on year at 21.6 million tonnes indicating a revival later in the year.
ICIS forecasts South Korean LNG imports this year will fall by 1.9 million tonnes to 38.5 million tonnes. 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 tonnes of LNG, which was 51% of the 354 million tonnes that was imported globally.
ICIS’ LNG demand forecast covers the rolling 24-month horizon, on a monthly granularity.