China’s air quality worsens in an indication of improving economic activity, Energy News, ET EnergyWorld

China's air quality worsens in an indication of improving economic activity New Delhi: As the battle against the Coronavirus outbreak intensifies across the globe, there is some positive news coming China where the pollution levels have started rising again. The degrading quality of air in China is a relief as it indicates the beginning of economic activity, consultancy firm Wood mackenzie said.

The data from the European Space Agency`s (ESA) Copernicus Sentinel-5P satellite indicates that there is an increase in the concentration of particulate matter in the air across northern and eastern China. The level of nitrogen dioxide in the air which primarily comes from power plants, industry and road transport increased in early March.

China’s oil demand had plummeted drastically after the Covid-19 broke out. There are reports indicating the oil demand has started improving slightly although the full data is yet to come.

The domestic travel is also eased which means gasoline consumption will grow leading to demand recovery. However, the recovery in the demand of jet fuel seems a distant future as the air travel restrictions are imposed all around the world.

China’s coming back to normalcy is a good news for the LNG industry too. In fact, prior to the outbreak of coronavirus, the LNG demand of China was slow due to weak economic growth. The containment measures had a profound effect on the gas demand.

Data suggests that China’s total gas imports increased by only 2.8 per cent throughout January and February.

Spot LNG prices and oil crash have eased the burden of Chinese LNG buyers. As the Brent crude prices came crashing down at nearly 30 bpd, the reduced oil prices will also benefit China`s NOC`s oil indexed contracts. If the Brent crude is sustained somewhere around US $35 bpd, both the legacy and the LNG prices will fall below the city gate price benchmark in Shanghai.

China's air quality worsens in an indication of improving economic activity
China’s path to recovery as far as LNG demand is considered is a long drawn battle. The government is taking steps to push the demand of LNG to non-residential consumers to help the businesses affected from coronavirus to resume operations. Though, they are positive steps, they are not enough to replace all the lost demand.

However, the Force Majeure requests on LNG contracts of China`s NOC were reportedly rejected by the LNG suppliers, the potential remains of the import terminals being disrupted by the travel restrictions, non availability of labor. This is a major concern of the LNG industry as it goes on a recovery mode.
China's air quality worsens in an indication of improving economic activity
Electricity demand has remained a key indicator of China’s GDP growth. At present, the electricity demand is encouraging but the supply chain disruption continues in hindering full industrial resumption.

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