February 4, 2020 / 12:26 AM / 16 days ago

RPT-China gas demand seen crumbling as virus threat spreads

(Repeats earlier story for wider readership with no changes to text)

* Chinese agency offers force majeure certificates

* Buyers in China mull requests for cargo delays, force majeure

* Expected to hit domestic gas demand - sources

By Jessica Jaganathan

SINGAPORE, Feb 3 (Reuters) - Buyers of liquefied natural gas (LNG) in China are bracing for demand to be shattered by a virus epidemic that has killed 361 people, wiped billions off the value of companies in the world’s second largest importer of the fuel and threatens its growth.

With demand already weakened in an economy slowed by a trade war with United States, several LNG buyers in China told Reuters they are considering either delaying cargoes or cancelling them by invoking force majeure, though nothing had been decided yet.

“I think (declaring force majeure on LNG imports) may be possible, as the epidemic keeps (growing) and having a huge impact on demand,” said a source with a Chinese firm who sought anonymity as he was not authorised to speak with media.

Last week, a Chinese international trade promotion agency said it would offer force majeure certificates to companies struggling to cope with the fallout of the epidemic on business with overseas partners.

It was not immediately clear if any LNG buyers had applied for the certificates but cargo deliveries into China for late February are expected to be delayed, a second source with a Chinese company said.

China had already been grappling with a high inventory of LNG as demand had been dented by a winter that was milder than usual and the slower economy.

Traders expect the economic impact from the virus to further hit gas demand and cause major delays in LNG cargo deliveries into China, as demand for gas in trucking and industries is expected to slow.

The newly identified coronavirus has filtered quickly to other parts of the world since financial markets in its second-largest economy began an extended Lunar New Year holiday on Jan. 24.

“We are supposed to see truck drivers coming back to work today, but no one is back because of the virus,” said one LNG trader in the northeastern city of Tangshan.

“Demand for LNG is really weak, compared to last year, as factory users are extending their holiday, and even mills are cutting their output. Only LNG gas stations run normally, as they provide livelihood facilities, but demand is also weak.”

Asia spot prices of LNG LNG-AS are already at their lowest in more than a decade and are expected to tumble further as Chinese demand slows, traders said. (Reporting by Jessica Jaganathan; Additional reporting by Chen Aizhu in SINGAPORE, Muyu Xu in BEIJING, Ekaterina Kravtsova and Julia Payne in LONDON; Editing by Clarence Fernandez)

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