On this week's S&P Global Commodity Insights' Market Movers Asia with Rituparna Nath: Crude buyers in South Korea and India are eyeing surplus barrels after the US announced last week it will release 1 million barrels per day from its strategic reserves. (00:14)
Other highlights from Asia's commodity markets:
*Fresh COVID-19 outbreaks in China have disrupted operations in the steel, aluminum and copper industries (01:18)
*Container freight rates are expected to rise this month (01:50)
*Spotlight is on World Agricultural Supply and Demand Estimates report (02:40)
This week, the metal industry is facing disruptions due to fresh COVID-19 outbreaks in China, container freight rates are set to rise this month, and spotlight is on the World Agricultural Supply and Demand Estimates report.
But first, Asian crude buyers will watch out for additional supplies after the US announced last week it will release 1 million barrels per day from its strategic reserves. The US is expected to release 180 million barrels from its reserves as it looks to rein in rising gasoline prices.
The SPR release has raised hopes among US crude customers like South Korea, India, Taiwan and Thailand of surplus barrels coming to Asia. For instance, South Korea, one of the biggest customers of US crude in Asia, is keen to take as many cargoes from the US as possible as it continues to favor competitive US barrels.
According to Korea National Oil Corp. data, South Korea paid an average of 90 dollars a barrel for US crude shipments in February, lower than the price for shipments from Saudi Arabia and Kuwait.
That brings us to our social media question for the week: Will the release of strategic oil reserves by the US rein in sky-high gasoline prices? Share your thoughts on Twitter and LinkedIn.
In metals, fresh COVID-19 outbreaks in China have disrupted operations in the steel, aluminum and copper industries.
In steel, the recent lockdown in Shanghai is expected to weigh on manufacturing activity this month, adding further pressure on domestic steel demand. Aluminum prices are also expected to remain under pressure, as destocking has been disrupted. In copper, inter-provincial transport of raw materials has been disrupted, which may impact operations of some smelters in north China.
The container market is also facing disruptions due to COVID-19. Freight rates are expected to rise in April and May after several carriers announced price hikes, after disruptions in ocean trade due to the virus outbreak. While the trade volumes from China are currently low due to curtailed manufacturing operations, market participants have expressed concerns about long vessel queues and cargo backlogs.
On March 30, the Platts Container Index was nearly 41% higher from a year ago.
Do check out the recently launched Platts Container Rate and Platts Bunker Charge Assessments for the Indian Subcontinent to East Coast North America route. These assessments by S&P Global Commodity Insights aim to give our subscribers a deeper insight into Asian trade.
And finally, in agriculture, the World Agricultural Supply and Demand Estimates report will be released this week. The report, released by the US Department of Agriculture, will provide future trade cues amid tight wheat supplies as the war in Ukraine rages on. Wheat exports from India and Australia are expected to increase in the next few weeks, which may compensate for the current supply shortfall.
Faced with surging grain procurement costs, Asian corn buyers will look for cues on US stocks.
In palm oil, markets may remain under pressure this week as top vegetable oil buyer India extended its stocking limits on edible oils and oilseeds by six months. Meanwhile, demand for cooking oil from China is expected to remain bearish amid the virus outbreak.
Thank you for kicking off your Monday with us. Have a great week ahead!