In this list
Electric Power | Natural Gas | Oil

COVID-19 curbs China's trucked LNG sales, casts shadow over gas demand

Commodities | Electric Power | Electricity | Energy | Coal | Energy Transition | Emissions | LNG | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Metals | Steel | Steel Raw Materials | Shipping | Tankers

Market Movers Europe, Oct 25-29: Mixed signals for oil prices, energy majors release Q3 results

Energy | Oil | Refined Products | Jet Fuel

Platts Jet Fuel

LNG

S&P Global Platts JKM LNG Workshop

Energy | Coal | Energy Transition | Oil | Petrochemicals | Natural Gas | LNG | Agriculture | Emissions | Renewables | LPG | Refined Products | Fuel Oil | Jet Fuel | NGL | Crude Oil | Naphtha | Gasoline | Olefins | Solvents & Intermediates | Biofuels

REFINERY NEWS ROUNDUP: Maintenance, outages in Middle East

Energy | Oil | Crude Oil | Refined Products | Energy Oil | Bunker Fuel | Gasoline | Metals | Non-Ferrous | Shipping | Marine Fuels

Commodity Tracker: 5 charts to watch this week

COVID-19 curbs China's trucked LNG sales, casts shadow over gas demand

Highlights

Reduced trucked LNG supply seen in coastal provinces like Jiangsu

Virus curbs hit gas demand in road transport and commercial sectors

High LNG prices exacerbate impact on gas demand

New outbreaks of COVID-19 in some Chinese cities and provinces recently have raised concerns over the country's mobility restrictions, casting a shadow over its natural gas demand in the third quarter of this year, according to trading sources and market analysts.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Trucked LNG sold by LNG terminals in the coastal Jiangsu province north of Shanghai have reduced as the government implemented tighter infection prevention and control, or IPC, measures due to cases attributed to the delta variant in the state capital of Nanjing and surrounding areas recently, domestic trade sources, including an executive from one of the big three state-owned oil companies, said.

"Transportation in Jiangsu and surrounding areas has been affected badly due to large-scale lockdowns in the province now ... trucked LNG volumes have come down obviously," a source with a city gas distributor confirmed this week.

"We expect that the impact on China's natural gas demand will be in the single digits," an analyst with domestic energy information provider SCI said.

Since the first new COVID-19 case was detected in Nanjing on July 20, the outbreak has spread to 15 provinces. As of Aug. 11, more than 1,000 local cases were detected, and 20 regions in China had been defined as high-risk and 202 as medium-risk areas, according to data from the National Health Commission and the General Office of the State Council.

The number of infections and areas affected were the highest in China since the situation had normalized at the end of April 2020, the State Council said at a press conference on Aug. 4, noting that tightened measures included shutting public transportation in medium- and high-risk areas, restricting the movement of people, slowing international passenger travel and increasing the frequency of tests for front-line staff and key personnel.

"Loading operations for trucked LNG and fueling at gas filling stations had slowed down significantly in many places recently, as drivers are required to produce a nucleic acid test report for COVID-19 within 48 hours, and transportation between cities has also been restricted," a second source, based in Beijing, said.

The person said the severity of COVID-19 controls measures was similar to March 2020 levels when the pandemic first broke out, and this was expected to reduce natural gas demand from the transportation sector.

Natural gas consumption from the transportation sector was estimated to account for around 10% of China's total gas demand, according to a report published by the Shanghai Petroleum and Natural Gas Exchange on July 18, citing data from CNOOC.

Many cities have also shut public places, including dining and entertainment venues, which is expected to affect natural gas demand for commercial use, domestic sources said.

"Our company's trucked LNG sendouts are estimated to have dropped by 10% last week due to tighter IPC measures," a third source with a gas company that mainly sells trucked LNG in the northern regions, including the Beijing, Tianjin and Hebei provinces, said.

Some market participants were more optimistic.

"People have learnt how to deal with COVID. There are standard operating procedures put in place and things carry on. So I don't think much impact on demand in China [is expected]," a fourth source with a gas producer said, adding that recent buy tenders issued by Beijing Gas, Shenzhen Energy, Guangdong Energy, and Guangzhou Gas do bit reflect reduced domestic gas demand.

Weather, higher price affect demand

In addition to the resurgence of COVID-19, bad weather and higher prices have also exerted downward pressure on China's natural gas demand, especially LNG demand, market sources said.

"Trucked LNG sales at many terminals have been slow, not only due to COVID, but also the bad weather and higher price offers, which reduced buying appetite," a fifth market source said.

Torrential rainfall has caused devastating floods in many cities and counties in Henan province since July 16, resulting in the suspension of natural gas and electricity services in those areas, local media reported.

Furthermore, typhoon In-Fa made landfall twice in Zhejiang province over July 25-26, then swept across Jiangsu, Anhui and Shandong provinces bringing heavy rainfall that slightly affected LNG loading operations and transportation.

A few market players attributed the decrease in trucked LNG send-outs to cooler weather in China due to the typhoon season and heavier rain, while high ex-terminal trucked LNG offers also dampened buying activity.

Trucked LNG prices in northern, eastern and southern China were around Yuan 5,500-6,000/mt on Aug. 11, up nearly 40% from early July, data from domestic natural gas information provider Haoqi Net showed, rising faster than JKM over the same period, Platts calculation showed.

The S&P Global Platts JKM, the benchmark price for spot LNG in Northeast Asia, crossed the $17/MMBtu level on Aug. 6, and was assessed at $16.988/MMBtu on Aug. 11.