Lower demand due to the coronavirus pandemic and supply cuts are expected to drag growth in the global LNG market in 2020, according to some analysts. Some of them even predict that global LNG trade will contract this year with US liquefaction facilities taking the hardest hit although other producers such as Australia, Indonesia, and Malaysia are not immune too.
Barcelona-based gas industry trade group, the International Gas Union said that in 2019, global LNG trade increased 13% to 354.73 million tons, marking the sixth year of successive growth. However, LNG demand in 2020 is expected to fall by 6.7 million tons and can plunge further by 13.8 million tons because of economic recession risk and a possible new wave of COVID-19 infections.
Analysts with brokerage Poten & Partners said global LNG imports could fall to 29 million tons/month over May to December 2020, from 32 million tons/month in the first four months of the year. A global consulting firm also expects that demand in the summer months of 2020 will shrink by 2.7% or 3 million from the previous year’s summer months.
Lower demand is expected to prompt producers to cut their production. US LNG producers are expected to lower their liquefaction utilization rates to below 50%, while their Australian and Qatari peers will likely maintain above 80% rates. Australian LNG supply is forecast to grow by 0.9 million tons this year. Meanwhile, Indonesia and Malaysia are forecast to see a decline of 0.8 million tons and 0.3 million tons, respectively.
