The coronavirus outbreak in China could put the global natural gas market under stress, the international rating agency Fitch Ratings said on Tuesday.
“ASIA AND EUROPE UNDER SEVERE STRESS”
The outbreak could put the gas markets in Europe and Asia under “severe stress” as China imports less liquefied natural gas (LNG), the agency said in a statement.
LNG imports to China, the world’s third largest gas consumer after the US and Russia, has been the key driver for the global natural gas market in recent years.
“Some Chinese importers of LNG have declared ‘force majeure’ on their contracts, which may cancel up to 70 percent of seaborne imports in February,” the agency said. “The magnitude of any demand loss will depend on the speed of business activity recovery,” it added.
On the supply side, the gas market has already a supply glut due to new LNG capacity additions in Australia, Russia and the US. “This was exacerbated by warm weather in Europe and Asia and the high level of gas storage in Europe,” the statement said. “Average spot prices almost halved as a result in 2019 compared to 2018,” it added.