U.S. exporters of liquefied natural gas (LNG) were already under pressure in Asia prior to the coronavirus outbreak in China, with ample supplies and mild weather keeping prices low. They are now facing even tougher conditions, as the virus is expected to lead to a slowdown in China’s industrial sector.
Under these circumstances, LNG prices could continue to fall and reach levels where Asian importers cannot even cover their shipping costs, Bloomberg said on February 5. If so, the news agency said, U.S. LNG exporters may have no choice but to suspend exports once they have filled their storage facilities to capacity.
Edmund Siau, an analyst in the FGE energy consultancy’s Singapore office, told Bloomberg: “Forward prices for summer are now at levels where U.S. LNG shut-ins begin to seem viable. There is usually a lead time before a cargo can be canceled, and we expect actual supply curtailments to start happening in summer.”