An oversupplied global gas market has come under even more pressure in the last week as prices in Northeast Asia declined on growing uncertainty about how the coronavirus outbreak in China might impact demand there.

While just two U.S. liquefied natural gas (LNG) cargoes have departed for China since early last year given the trade rift between the two countries, weakening sentiment there is weighing on global prices that were already trading at unprecedented lows for this time of year.

Northeast Asia is basically driving the global market as Europe is flooded with gas at a time when demand is lower on warm weather, said ClipperData’s Kaleem Asghar, director of LNG analytics. The Japan Korea Marker, Northeast Asia’s LNG benchmark, hit a new record low on Monday when it passed a $4.00/MMBtu floor and hit $3.512.

Fears about the absence of demand in China, the world’s second largest LNG importer behind Japan, are “hammering prices,” Asghar said. And while industrial demand is seen facing the greatest threat there, it remains difficult to gauge the outbreak’s full impact on gas consumption as Lunar New Year celebrations — typically a time of reduced usage — have been extended in some parts of the country because of the virus.

“The coronavirus, I’m sure, will keep a lot of people on edge, and rightly so,” said Royal Dutch Shell plc CEO Ben van Beurden last week on CNBC’s Squawk Box Europe. “It is a very concerning development, a lot of people will be anxious, and of course we are monitoring very closely what is happening.”

Van Beurden, who helms the world’s largest LNG trader, said he was “absolutely convinced” that concerns about the virus “will not help sentiment” in global energy markets.

Asghar said the coronavirus’ impact could become more evident if Chinese buyers soon try to resell their cargoes. China’s major state-owned LNG importers are also reportedly considering force majeure declarations, which would absolve them of their obligations to take contracted deliveries.

The outbreak comes at a time when Australia, Qatar, Russia and the U.S. have been steadily producing LNG. Feed gas deliveries to U.S. export facilities hit a new record high of 9.13 Bcf/d on Jan. 28, according to Genscape Inc. Deliveries have continued to increase and were at 9.28 Bcf/d on Monday, according to NGI’s U.S. LNG Export Tracker.

“Recent days’ volumes have been somewhat volatile with operational upsets at Sabine, but the ramp in operations at Freeport that begin mid-month, along with a recovery in deliveries to Cameron have boosted the top-day number,” Genscape said last week.

U.S. exports increased between Jan. 23 and Jan. 30 to 75 Bcf, as 21 vessels departed, including eight from Sabine Pass, four from Freeport, three from Corpus Christi and two each from Cove Point, Elba Island and Cameron, according to the Energy Information Administration. That compares to 15 vessels that left the prior week carrying 54 Bcf.

The global supply glut is hurting shipping too, with vessel rates falling on extended holidays in China and limited demand, according to shipbroker Fearnleys AS.

Spot rates for 174,000 cubic meter ships, or those with the capacity to transport nearly 4 Bcf that are becoming the standard LNG transport vessels worldwide, slid from $105,000/day in the Atlantic Basin and $94,000/day in the Pacific Basin on Jan. 24 to $80,000/day in both regions on Jan. 31, Fearnleys said.

Also in the U.S. last week, Cheniere Energy Inc. celebrated a milestone, announcing that it had produced and exported its 1,000th cargo. Cheniere was the first to export LNG from the U.S. in 2016. 

Edge Gathering Virtual Pipelines 2 LLC also said last week it had been selected by a large unconventional natural gas producer in northern Pennsylvania to liquefy Marcellus Shale production from stranded wells in Tioga County. 

Edge, which launched last year, said it would deploy truck delivered equipment to production sites, including two liquefaction units. The company would purchase gas from the producer to deliver via trucks to customers in the region. Edge said it also signed a supply deal with the city of Norwich, CT.

Poland’s state-owned natural gas company, Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG) said it cut Russian gas imports to 60% of its supply last year. That’s compared to 67% in 2018. The country has moved to reduce its reliance on Russian imports and indicated last year it would eventually terminate a supply deal with Russia’s Gazprom.

Russian imports declined as Poland took in more gas from Norway, Qatar and the United States, PGNiG said. In recent years, the company has signed a major agreement with Qatargas to increase LNG imports. PGNiG also has inked deals with Cheniere Energy Inc., Sempra Energy and Venture Global LNG to take volumes from proposed and existing export terminals along the Gulf Coast.

“Poland has signed a number of deals to bring in more LNG from the U.S., and is continuing to build up its infrastructure, its storage and regasification capabilities,” said Energy In Depth spokesman Dan Alfaro. “These moves have positive implications for Ukraine as well. As Poland builds up its infrastructure, Ukraine will be able to buy more American natural gas.”