June 11, 2020 / 10:39 AM / a month ago

Japan city gas demand falls 20% in May due to COVID-19

TOKYO (Reuters) - Japanese city gas demand fell by about 10% in April and more than 20% in May, compared with a year ago, as COVID-19 forced hotels and restaurants to shut down and factories suspended operations, the head of a local industry body said.

“An impact from the coronavirus pandemic on our business is quite significant,” Michiaki Hirose, chairman of the Japan Gas Association, told a news conference on Thursday.

The commercial segment such as hotels and restaurants has been the hardest hit, with gas sales plunging 20% to 30% in April and 50% in May from a year earlier, he said, citing a survey from several key city gas suppliers.

Gas sales for the industry segment, including automobiles and steel plants, slid about 10% to 20% in April and 20% to 30% in May, he said, adding that household demand is seen to have risen.

“Things are slowly improving in June but demand will largely stay weak,” he said, adding that it may take “long time” for demand to recover.

Hirose, also the chairman of Tokyo Gas Co, the country’s biggest city gas supplier, predicted oversupply in global liquefied natural gas (LNG) market will likely continue for a while.

Japan is the world’s biggest LNG importer.

“The surplus of LNG will be a serious management issue also for buyers as we have committed to take a certain level of supply under the long-term contracts with gas producers,” he said, citing that the magnitude of demand loss from the pandemic is significant.

“We need to devise ways to deal with the current situation somehow under the global mechanism,” he said.

Asian spot LNG prices have been trading near record lows of below $2 per million British thermal units (mmBtu) on oversupply and a slump in demand.

Reporting by Yuka Obayashi; editing by Uttaresh.V

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