Much has been written – and speculated – about the impact the outbreak of a new coronavirus (aka 2019_nCoV, i.e. 2019_newCoronaVirus) in China has had on LNG demand in the country. The term ‘coronavirus’ refers to a large family of viruses responsible for illnesses such as the common cold as well as severe respiratory impairments, according to the WHO. Market concerns have been amplified by prevailing LNG oversupply in the Pacific region.

The WHO received the first report of a 2019_nCoV case on 31 December last year, with first infections estimated to have taken place as early as mid-November. However, Chinese economic activity was not affected by public health action at the time. This changed on 23rd January, when the wider metropolitan area of Wuhan – believed to be the epicentre of the outbreak – as well as 10 neighbouring cities and municipalities were quarantined. Notably, the annual Spring Festival holidays marking a time of nationwide mass-travelling were due to start on 24th January. All quarantine areas are located in Hubei Province in Central China. Other metropolitan areas such as Shanghai and Beijing have since had travel limitations of varying degrees imposed, too, but there are no indications they were quarantined like Wuhan. Later, China’s Spring Festival holidays were officially extended to 2nd February and by up to 25 days to 24th February by individual companies such as CMA CGM Group (different extensions apply to different regions) to reduce staff exposure at work. Importantly, public holidays in provinces hosting LNG terminals except those located in Tianjin had ended at the time of writing.

China’s LNG imports have been on a solid path for annual growth. As such, LNG offtakes had grown by more than 15% in 2019 with average utilisation of nominal capacity at 99%. In terms of January imports, 2019 saw demand growth of almost 36% compared to 2018. Although offtakes in January 2020 had decreased by almost 11% compared to 2019, they were still more than 21% higher than in January 2018.