The highlights on S&P Global Platts Market Movers Asia, with senior analyst Crystal Hao:
* Factors keeping LNG prices high persist
* Asia refiners hopeful for easing of US-Iran tensions with Biden at the helm
* Metals market to take cue from China GDP data
* Chinese power utilities restock ahead of Lunar New Year holidays
This week: Markets to take cues from China's GDP figures, the cold winter in the northern hemisphere keeps pressure on energy prices, and eyes are on potential policy changes as the Biden administration takes the helm in the US.
But first, LNG prices remain on the spotlight. Asian spot prices for February peaked at 32 dollars and 50 cents per MMBtu last week as the North Asia region continues to face fuel and energy shortages.
The Platts JKM price assessment will roll into March this week. But there are indications of weakening sentiment for March delivery as buyers are getting more offers.
Many of the factors that have kept prices high continue to persist, along with the threat of even colder weather in the US and Europe in coming weeks. This could see the Atlantic basin and Pacific basin compete for LNG cargoes at higher prices.
Meanwhile, eyes will be on the inauguration of US President Joe Biden. Asian trading sources and refinery officials say US foreign policy won't change much under the new leadership. But the relationship between Washington and Tehran is expected to improve compared to the situation under the Trump administration.
Asia's refining and downstream petrochemical sector is hopeful that tensions between the US and Iran will ease and allow Iranian oil trades to partially resume within the next two years.
South Korean end-users in particular are looking forward to procuring highly popular Iranian South Pars condensate again in the future. This graph shows South Korea's crude and condensate imports from Iran. South Korea was the biggest customer of Iran's ultra-light crude oil before the international sanctions on Iran prompted the country to completely halt oil purchases since May 2019.
This leads us to our social media question this week: Will the new Biden administration help generate commodity demand? Share your thoughts on Twitter with the hashtag PlattsMM.
Turning to metals,the market digests China's macroeconomic announcements today. Q4 and therefore full year GDP is the headline number, of course. But weak growth for property and infrastructure investment in Q4 could further dampen sentiment and construction steel prices.
Iron ore prices may start to ease from their recent elevated levels due to shrinking steel margins, as you can see on this chart. Also, raw materials restocking will start to slow ahead of the Lunar New Year holidays.
Asian steel and aluminum companies will be seeking any signs from the incoming Biden administration that the Section 232 import tariffs may be phased out. Also, any economic stimulus measures could have a positive impact on exports of Asian manufactured products to the US.
In thermal coal, seaborne traders will be hoping for some relaxation around importing Australian material into China. Rains in Kalimantan and Sumatra in Indonesia have slowed loading. Chinese power utilities are restocking ahead of the Lunar New Year, and miners have raised their offer prices due to the northern hemisphere winter.
On that chilly note, thanks for kicking off your Monday with us. For more on all the issues affecting commodity markets from wherever you are, make sure to check out Platts LIVE at the address displayed on your screen. Have a great week ahead!