Asian refiners ramp up buying activity for May loading cargoes, talks begin for a key thermal coal price, and freight rates for Supramaxes gather steam. Energy analyst Manjot Singh looks at these and other factors that could drive commoditiy markets this week
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Video Transcript
This week, Asian refiners ramp up buying activity for May loading cargoes, talks begin for a key thermal coal price, and freight rates for Supramaxes gather steam.
But first, in oil, the Middle East crude market is set to be active this week, with Asian refiners expecting to buy light and medium sour crudes for May loading at competitive prices.
This comes after major Middle Eastern producers lowered their monthly official selling price differentials and the Dubai market structure flipped to discount - for the first time since last September - as a flurry of arbitrage cargoes from the Americas arrived in Asia.
Also in oil, keep an eye out for China's largest oil company PetroChina releasing its annual operations report for 2017, and its production plan for 2018, on Friday.
In petrochemicals, Saudi Arabia's Petro Rabigh is expected to load the first paraxylene cargo from its new Phase 2 project next week after achieving on-spec production last week. The news will likely weigh on paraxylene prices this week after earlier talk of a possible delay in on-spec production helped to buoy prices.
In coal, Asia’s seaborne market will be watching for a key benchmark price to emerge this week from Japan for term contracts that start April 1. The closely-watched talks got underway last week between Japanese buyers and Australian shippers for 6,000 NAR thermal coal.This grade is currently trading at around $95/mt, but the market is in backwardation.
High stockpiles in China and warming weather have also slowed buying recently, dragging prices down. Australian 5500 NAR thermal coal has fallen $3/mt in a week.
Do you think last year’s Japan contract price of $85/mt, FOB Newcastle, will be bettered this year? Tell us what you think via Twitter via #PlattsMM.
In shipping, Supramax rates will start the week higher after rising last week as tonnage supply fell in the region. Demand from other cargoes like nickel ore and clinker is adding support, while demand from coal cargoes is slowing.
Medium Range tanker owners are also set to capitalize on strong demand this week to move distillate cargoes from Singapore and North Asia to Australia and the Americas.
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