On this week's S&P Global Commodity Insights' Market Movers Asia with Shilpa Samant: Traders will eye the surging Southeast Asian sweet crude price differentials. (00:13)
Other highlights from Asia's commodity markets:
*India's fuel export volumes in the spotlight after windfall tax cut (00:45)
*Asian buyers await return of Ukrainian wheat, corn (01:12)
*India set to increase sunflower oil imports (01:55)
*China's steel demand may worsen (02:15)
*Focus is on downstream demand in petrochemical markets (02:42)
This Week – Weak steel demand is expected to persist in China, focus is on downstream demand in petrochemical markets, and Asian buyers await return of Ukrainian grains to the market.
But first, in crude oil, traders will eye the surging Southeast Asian sweet crude price differentials.
Malaysian and Vietnamese oil are commanding spot premiums of more than 10 dollars a barrel.
The premiums have been supported by robust middle distillate cracks and the short-haul logistical advantage as demand in Indonesia and Australia continues to increase. Many Thai and Chinese independent refiners are also opting for short-haul supplies from Southeast Asia amid the sharp rise in shipping fuel costs.
Moving to India, traders await the impact of the government's decision last week to slash the recently introduced windfall tax on fuel exports. Export duty was cut by 2 rupees per liter for diesel and aviation turbine fuel, and completely withdrawn for petrol. The market will analyze the impact of this tax cut on the export volumes from India amid the seasonal monsoon lull in domestic demand.
In agriculture, markets will be keenly watching the impact of the Russia-Ukraine-Turkey deal signed on July 22. The agreement will allow Ukraine to start shipping grain from its besieged ports. Billed as a deal that is important for global food security, it will bring back Ukrainian agriculture products like wheat and corn to the global market. This is likely to ease the pressure on Asian buyers witnessing higher prices and supply issues.
That brings us to our social media question for the week: Will the resumption of Ukraine's grain exports allay global food security concerns? Share your thoughts on Twitter and LinkedIn.
Moving to edible oil, India could buy more sunflower oil as Russia's move to bump up the quota for sunflower oil exports may narrow the price spread to other edible oils. The world's largest edible oil importer has been buying more palm and soybean oil because of the massive fall in prices in recent weeks.
In metals, China's steel market demand may worsen if defaults on mortgage payments for unfinished houses persist as it would further dampen property sales. The plunging steel demand may also continue to impact connected markets like coking coal, met coke, iron ore and copper. Steel mills have been widening output cuts from mid-July amid low prices due to an oversupplied market and lackluster demand.
And finally in petrochemicals, the purified terephthalic acid market will closely follow demand in the downstream fabric market, both in China and India. The fabric markets in the two regions have been subdued in the last few months because of inflationary pressures and COVID-19 related bottlenecks. Prices of purified terephthalic acid are likely to be driven by production costs and crude price movement.
The Asian ethylene market is also likely to remain under pressure from weak downstream demand and relatively high upstream naphtha prices.
Thanks for kicking off your Monday with us. Have a great week ahead!