COVID-19IMPACT ON LIQUID NATURAL GAS IN THE CHEMICAL AND MATERIALS INDUSTRY
COVID-19 IMPACT ON LIQUID NATURAL GAS IN THE CHEMICAL AND MATERIALS INDUSTRY
The COVID-19 outbreak has created enormous and unexpected economic and social stress. Its effects are severe and, while its period is unclear, it is too early to determine the impact. In a number of ways the LNG industry is affected, with some challenges but also with some opportunities. By principle, the LNG sector will rebound more healthily from this recession than it did at the beginning of this year. The first issue which affected LNG (liquified natural gas) was the collapse of crude oil prices. Brent crude oil dropped from USD 70 per bbl in January 2020 to USD 24.88 per bbl by the middle of March 2020. The tendency toward USD 34 per bbl in March relative to USD 64 per bbl in January that lead to a decline in the price of LNG contracts, but the time lag embedded for other contracts means that the variables will not work until mid-year. The price is around 64 US Dollars per bbl. Most of the customers gained lower spot rates last year because the majority of LNG was supplied under term contracts. In December 2019, the average LNG prices were USD 9.24 per MBtu imported into Japan. The real landed price could be half of that by mid-2020. Subsequent Asian markets are emerging from the current coronavirus or COVID-19. Crisis, low prices of the LNG are likely to boost the demand in the desired market.
