Global LNG deliveries fall again in July

Slower demand from Latin American countries struggling with the viral outbreak have weighed heavily on overall LNG receipts

Global LNG deliveries in July fell on the year for the second consecutive month, mostly as a result of slower demand in Latin America and some of the largest importers in northeast Asia.

Combined LNG deliveries around the world fell to 29.2mn t in July from 29.9mn t a year earlier, preliminary vessel-tracking data suggest. Deliveries fell more sharply in July than in June, with the decrease equivalent to about 10 standard-sized cargoes. June receipts had been just 4-5 cargoes short of June 2019 deliveries.

The drop in global LNG receipts was largely the result of slower Latin American demand. Brazil has not received any LNG cargoes since May, and Mexico took less than half of the LNG it received in July last year. Slower deliveries to Brazil and Mexico — two of the countries hit hardest by the coronavirus outbreak — were offset only partly by slightly stronger deliveries to Argentina and Chile.

Northeast Asian LNG receipts also fell well short of July 2019 volumes. But the drop in global deliveries would have been twice as much if Chinese receipts had not grown. China received about 800,000t more LNG than a year earlier, offsetting the drop in combined deliveries to Japan, South Korea and Taiwan.

Weaker demand from Latin America and the Middle East may have accentuated LNG market seasonality this year, although this was partly offset by smaller seasonal swings in China. China's receipts in July were about 6pc higher than the January-June average and 4pc higher than in the previous 12 months.

China was expected to accentuate LNG market seasonality because of its limited availability of underground storage capacity. But a sharp reduction in deliveries amid the initial Covid-19 outbreak earlier this year, and lower crude prices providing an incentive for a pipeline to LNG supply switch, provided scope for particularly strong LNG deliveries this summer.