The liquefied natural gas market contracted in June with the global pandemic ending the fuel’s rapid growth streak.
Global imports of the fuel last month fell 6.4% year-on-year, the first decline since at least December 2017, according to ship-tracking data compiled by Bloomberg. That compares to a 10% average growth rate for the previous 30 months. Exports also slipped as suppliers reacted to the drop in demand.
COVID-19 measures have forced LNG buyers including South Korea and Mexico to delay or reduce deliveries, which sent spot prices spiraling to record lows. While prices in North Asia and Europe have started to gain ground in the last month, high inventories and a steady stream of exports from some cornerstone suppliers -- like Qatar and Nigeria -- could put the recovery at risk.
BloombergNEF expects demand to fall as much as 5.3% this year if the pandemic persists, marking the first annual decline since 2013, with another drop possible in 2021. Still, COVID-19 is just a road bump for long-term demand, which BNEF sees growing by as much as 89% over the next two decades.
South Korea’s imports for June dropped 23%, the most among buyers in Asia, the region with the biggest consumers of the fuel. Its top buyer, Korea Gas Corp., deferred some shipments through October, and has even requested that smaller Korean importers not use designated terminal slots due to high stockpiles, according to traders.
Japan’s imports slightly recovered from an 11-year low, but were still down year-over-year as power use and factory output remain weak after a state-of-emergency was lifted in late-May.
France, one of Europe’s top importers of the fuel, saw inbound shipments plummet by more than half in June, due in part to maintenance at its Dunkirk facility and a drop in U.S. deliveries. European gas storage was at 80% capacity on Sunday, compared with the 5-year average for that day of 56%.
China bucked the trend with imports rising slightly. While that indicates demand is rebounding since COVID-19 slashed consumption earlier this year, it’s still well below the rapid growth rates the country saw in 2018 and 2019. Similarly, Indian demand recovered after its nationwide lockdown was lifted.
Most of the world’s suppliers curbed deliveries in the face of weaker demand, with global exports down 6.3% from the previous year.
U.S. exports fell about 22% from a year earlier due to customers canceling cargoes slated to load from Gulf Coast projects. Scheduled gas flows to U.S. terminals on Wednesday hit the lowest since April 2019 and were down 67% from a peak in March.
Australia’s exports dropped after holding largely steady in the previous months. Malaysia’s exports were also down, keeping with a trend of lower output from April.
Shipments from the world’s top exporter -- Qatar -- slightly rose year-on-year in June, despite customers requesting delays or lower volumes. The nation’s export facilities are among the lowest cost plants in the world and can still turn a profit despite weak spot prices.
Here’s a breakdown of global imports by country, according to preliminary data compiled by Bloomberg. Numbers might be slightly tweaked over time as data points are confirmed. Some percentage figures are rounded and blanks indicate no comparable data is available:
Here’s a breakdown of global exports by country, according to preliminary data compiled by Bloomberg:
