Market concerns on the US decision on Iran sanctions are expected to continue this week, ahead of the May 12 deadline. A US decision to reimpose sanctions on Iran would hit Iranian oil exports and potentially disrupt global oil supply.
Meanwhile, commodity markets are closely watching the fast-changing geopolitical and geo-economic landscape in the Korean peninsula following the meeting between South Korean president Moon Jae-in and North Korean leader Kim Jong-un last Friday. Warming relations between the two countries could lead to the resumption of joint economic projects such as the Kaesong industrial complex. Markets are also looking out for the possible opening of North Korea to the international commodities trading.
In agriculture, white sugar prices are at multi-year lows. Thai spot cash values may be supported this week by increased buying interest from end-users in Taiwan and East Africa, as well as reports of increased inquiries from Myanmar.
Associate editor Mia Corazon Aureus looks at these and other factors that could drive commodity markets this week.
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Video Transcript
This week: Market concerns on Iran sanctions remain ahead of the May 12 deadline, North and South Korea's meeting stirs the Asian commodity and financial markets, and sugar prices hit multiyear lows.
First, in oil, Market concerns on the US decision on Iran sanctions are expected to continue this week, ahead of the May 12 deadline. A US decision to reimpose sanctions on Iran would hit Iranian oil exports and potentially disrupt global oil supply.
Market participants are closely watching the fast-changing geopolitical and geo-economic landscape in the Korean peninsula following the meeting between South Korean president Moon Jae-in and North Korean leader Kim Jong-un last Friday. Warming relations between the two countries could lead to the resumption of joint economic projects such as the Kaesong industrial complex. Markets are also looking out for the possible opening of North Korea to the international commodities trading.
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Still in oil, Chinese state-owned companies await the second round of oil product export quotas this week. Government-imposed limits on exports are expected to pull April numbers down from the record high seen in March when gasoil and gasoline exports hit 2.38 million tons and 1.7 million tons, respectively. Traders said the unusual delay of Beijing in handing out the quotas could affect export shipment plans of some refiners even in May.
In bunker fuel, the Maritime and Port Authority of Singapore announced on April 27 that it will implement mass flow meters mandate for distillate bunker delivery starting July 1, 2019. This could further weed out errant players, and ensure greater transparency and efficiency in the market.
In LNG, market participants are evaluating price direction signals amid recent deals and high oil prices. These have opened optimization opportunities for traders despite weak end-user demand from key importing countries South Korea and Japan.
In agriculture, White sugar prices are at multi-year lows. Thai spot cash values may be supported this week by increased buying interest from end-users in Taiwan and East Africa. Reports of increased inquiries from Myanmar just before the government there issues reimport licenses may also continue to support cash values in Asia this week.
And finally, in Metals Global alumina prices plunged last week as the US eased sanctions against Russian producer Rusal. Pacific alumina fell to 625 dollars per metric ton FOB Australia after peaking at 710 dollars. The market expects output cuts at Brazil's Alunorte refinery to provide continued support. But China's keen alumina export interest could add pressure.
And that's the market in a nutshell this short week in Asia. Thanks for kicking off your Monday with us and have a great week ahead.