On this week's Platts Market Movers Asia with Associate Editor Joanne Ju: Surging retail gasoline and diesel prices are once again beginning to rattle Asian consumers. (00:15)
Other highlights from Asia's commodity markets:
*Asian thermal coal prices are rising due to tight supply (02:00)
*Spot LNG prices are under pressure ahead of the Lunar New Year (02:30)
*China's soybean demand is expected to remain subdued amid weak crushing margins (03:13)
This week: Asian LNG spot prices are under pressure ahead of the Lunar New Year, thermal coal prices in the region are inching up even as Indonesia relaxed its export ban and China's soybean demand remains muted amid weak crushing margins.
But first, Asian crude traders and transportation fuel marketers are closely watching the latest uptrend in oil prices as higher feedstock procurement costs could put pressure on refining margins. Lofty retail gasoline and diesel prices are once again beginning to rattle consumer sentiments across the region.
Platts Dated Brent hit a seven-year high of more than 90 dollar per barrel last week and backwardation in Dubai market structure widened rapidly.
Asian oil industry participants continue to call for the OPEC+ to raise the pace of the group's monthly output increases. Nine major Asian refiners surveyed by S&P Global Platts indicated the producer group should ideally raise supply by at least 800,000 barrels per day. But OPEC and its allies are standing firm on increasing crude output quotas by a modest 400,000 barrels per day.
That brings us to our social media question for the week: Do you think oil prices will continue to rise with OPEC+ sticking to its output plans? Share your thoughts on Twitter and LinkedIn with the hashtag PlattsMM.
Meanwhile, China's lower 2022 export quotas have set the stage for steep cuts in gasoline, gasoil and jet fuel shipments across the regional market. Total oil product shipments fell by 12 per cent on the year in 2021 and analysts expect the decline to continue in 2022, with gasoline exports expected to see deeper cuts compared to gasoil.
In the nonferrous sector, markets are closely tracking Indonesia's reported plans to impose taxes on nickel products. Nickel prices on the Shanghai Futures Exchange have been rising over the past two weeks, as domestic stocks in China fell to a record low.
Moving to thermal coal, traders expect Indonesian coal prices to remain elevated due to a surge in demand amid piled up order backlogs. The backlogs were due to Indonesia's three-week blanket ban on exports, which was eased to some extent in the week ended Jan. 21.
Australian thermal coal prices are likely to continue rising due to supply tightness. The tightness results from wet weather conditions and spread of COVID-19 that is disrupting production amid bullish demand.
In LNG, Asian spot LNG prices have slumped in recent weeks due to weakening market fundamentals after hitting record high levels at the end of 2021. The Platts price for spot LNG cargoes to northeast Asia, called JKM, dropped below 20 dollar per MMBtu last week compared to around 40 dollar per MMBtu at the start of the year.
Spot LNG demand from China is expected to remain under pressure in the coming weeks due to the week-long Lunar New Year holidays in early February and the Winter Olympics in Beijing. LNG demand for the cold season has also subsided due to mild winter temperatures and healthy stockpiles among most Asian importers.
And finally, in agriculture, markets are closely watching China's buying trends for soybean. China's demand is seen limited due to weak crushing margins. Muted demand is expected to continue due to the Lunar New Year holidays. China has been booking Brazilian beans in recent weeks, overlooking US markets, despite sharp reduction in Brazilian soybean crop production due to adverse weather conditions.
Thanks for kicking off your Monday with us. Have a great week ahead!