On this week's Platts Market Movers Asia with Ashna Mishra: Risks to commodity trades have grown after new sanctions on Russia were announced for its invasion of Ukraine. These could lead to payment and other logistical disruptions, further supporting commodity prices.
*Asian refiners are reassessing logistical risks in trade flows from Black Sea (00:24)
*Eyes are on rising Asian LNG prices amid fears that Russian gas may become harder to trade (01:26)
*Aluminum, nickel prices are on the rise; steel, iron ore markets face supply chain disruption (02:02)
*Australian wheat is in demand amid turmoil in Black Sea region (02:40)
*Shipping industry braces for disruption amid sanctions and port closures (03:32)
This week: Risks to commodity trades have grown after the US, Canada, Japan and European allies announced a new slate of sanctions over the weekend on Russia for its invasion of Ukraine. It will bar Russian banks from the international payment system SWIFT and tie the hands of its Central Bank. Though details are yet to be unveiled, these could lead to payment and other logistical disruptions, further supporting commodity prices.
In oil, Asian refiners will be reassessing logistical risks in trade flows from Black Sea amid Russia's invasion of Ukraine and the latest round of sanctions. Feedstock managers at Indian and South Korean refiners have until now said there are no logistical hiccups for importing crude using the Black Sea terminals, but that scenario has changed after at least two ships were struck by missiles in the area last week.
Refiners will need to assess all risks before committing to Q2 delivery purchases of Russian Urals and Kazakhstan's CPC Blend crude oil.
India's BPCL and Indian Oil Corp. are regular buyers of the Russian medium sour Urals crude, while South Korea's SK Innovation and Hyundai Oilbank are among key Asian buyers of CPC Blend crude.
Before the SWIFT sanction, Urals crude was assessed at its lowest level ever relative to Dated Brent on Feb. 24. Market sources said the refiners have drawn up contingency plans in the event of legal, financial, and administrative hurdles in doing business with Russian oil entities.
Asia Pacific LNG prices also face great uncertainty as the threat of Russia's gas supplies to Europe being impacted grows with each passing day of the conflict.
Markets fear a further surge in European gas prices could spark another rally in Asian LNG prices and trigger more demand destruction in the region. Asia Pacific LNG prices rose to their highest levels since October to nearly 37 dollars per MMBtu on Feb. 24. Gas infrastructure and vessels coming under attack in Ukraine and fears that Russian gas may become harder to trade due to payment restrictions are weighing on market sentiment.
In metals, prices of aluminum and nickel are expected to remain elevated in the near term as markets await the impact of the latest round of sanctions on Russia, a key supplier of these metals. Prices of nickel and aluminum had risen sharply last week after the Russian invasion.
Steel and iron ore markets will also be watching out for supply chain disruptions. Russia's invasion of Ukraine has caused major logistic disruptions for steel and iron ore transport in Ukraine. Market participants said major companies such as Metinvest and ArcelorMittal were seen reducing their steel production, as rail freight services were hampered, and several ports closed.
Next up, in agriculture, grain markets will be closely watching the rally in Australian wheat prices as key purchasers of Black Sea region wheat are likely to look for alternatives.
Prices of Australia's prime white wheat and Black Sea wheat rose sharply last week.
Key wheat suppliers—Russia and Ukraine—usually export to large buyers such as Egypt and Turkey. But with trade flows from Black Sea in turmoil, Australia is likely to turn into a major wheat supplier in the coming days.
Meanwhile, vegetable oil prices also spiked sharply in the last week, as markets await supply clarity from the Black Sea region. Ukraine and Russia are the largest exporters of sunflower oil, keeping buyers on tenterhooks.
That brings us to our social media question for the week: Will Australia emerge as a major wheat supplier amid turmoil in the Black Sea region? Share your thoughts on Twitter and LinkedIn with the hashtag PlattsMM.
And finally, in shipping, the market will be bracing for disruptions after attacks were reported on several ports in the region. Japan's major shipowner Nippon Yusen Kaisha, or NYK Line, has decided not to send more of its ships to Ukraine as three of its vessels are currently stuck at Ukrainian ports. Participants are also awaiting details on companies that are likely to come under the purview of the sanctions. Charterers are reluctant to use ships with Russian ownership. Russia's largest shipping company Sovcomflot, which runs more than 100 tankers has already been placed under US sanctions.
Thanks for kicking off your Monday with us. Have a great week ahead!