The global LNG industry is set to see the first seasonal demand decline in 8 years, according to an international research and consultancy firm. Global LNG demand in the summer of 2020 is expected to fall by 2.7% or 3 million tons from a year earlier, dragged by lockdown measures and negative economic outlook caused by the COVID-19 pandemic.
Japan, the world’s largest LNG importer, issues work-from-home guidance, implements strict social distancing measures, and closes school to contain the disease. Japan’s LNG imports declined in the first quarter of this year. The fall is expected to continue in the second quarter by 3% year-on-year to 15.8 million, exacerbated by high inventory levels.
China increased LNG imports in the first quarter of 2020 despite the outbreak, while pipeline gas imports fell by 1% year-on-year. China’s LNG imports will likely depend on the country’s target for the coal-to-gas switch. It remains unclear whether Beijing will moderate the measure to support its virus-hit economy. Any moderation will reduce gas consumption during the heating season. China’s LNG demand is expected to rise by 12% year-on-year to 15 million tons in the second quarter, thanks to the recovery in power demand.
India’s LNG imports grew at record levels of 19% year-on-year in the first quarter as demand decline in other countries pushed spot prices to record lows. However, its LNG demand is projected to fall by 24% to 4 million tons in the second quarter.
The decline in Europe’s total gas demand was not as severe as Asia, thanks to resilient demand from residential use and the power sector. Besides, the share of gas used by the European industrial sector is smaller compared to other regions. However, high inventory levels are expected to reduce Europe’s ability to absorb more LNG imports.
