Will oil producers decide to extend the OPEC and non-OPEC supply cut agreement? How will markets react to news about deals worth around $50 billionbetween Saudi Aramco and US companies signed during US President Donald Trump's visit to Saudi Arabia. And what does the re-election of Iran's President Hassan Rouhani mean for the petroleum sector? Associate editor Xiaojuan Gao looks at this and other factors that could drive commodity markets this week.
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Video Transcript
Welcome to Platts Market Movers, your three-minute look at what the week ahead holds for Asian commodity markets.
This week’s highlights: A tumble expected in caprolactam prices, more details set to emerge on China's sugar import tax, and a stumble seen likely in clean oil tanker rates.
But first in oil, all eyes will be on the key meeting in Vienna Wednesday and Thursday, where producers will decide whether to extend the OPEC and non-OPEC supply cut agreement. There appears to be consensus in the market that last December’s agreement to cut production will be extended to March next year.
Saudi Aramco signed deals worth around fifty billion dollars with US companies Saturday during the visit of US President Donald Trump to Saudi Arabia. The deals are likely to be viewed as positive by commodity markets this week.
In Iran, election result confirms there is popular support for outward-looking policies, which bodes well for companies looking to invest in Iran's oil, chemical and transport sectors, market sources said Monday. President Hassan Rouhani won a second term in Friday's vote by a decisive margin.
Do you think the weekend’s developments in the Middle East bode well for the supply cut agreement talks this week?
Moving to petrochemicals, caprolactam prices in Northeast Asia are expected to fall sharply this week as ample local supply in China puts pressure on import prices.
In Taiwan, tighter supply from Japan has led to a $300 price gap to delivered prices to China. However, the restart of a major plant over the weekend could help ease the supply shortage there.
Moving to agriculture, China is expected to release more details of its sugar import tax changes this week. The tariff for out-of-quota sugar imports is expected to be raised to 95% from the current 50%.
In shipping, clean tanker rates face more downward pressure this week as the number of naphtha cargoes moving from the Middle East to North Asia declines. This is proving a bonanza for charterers, who can lock in ships at lower freight rates. The earnings of Long Range tanker owners have slumped below seven thousand dollars a day on the key route route.
In LNG, South Korea’s spot procurement plans will be in the spotlight this week after the country's President last week ordered a temporary shutdown of eight ageing coal-fired power plants by June 1. This could usher in more spot inquiries by Korean buyers, especially KOGAS, which could lend some support to prices.
Finally, in coal, Indonesia is preparing for its month long fasting period of Ramadan, which might result in disruptions to production in the weeks to come.
That's it for this week. Send us your views on Twitter with the hashtag PlattsMarketMovers. Thanks for kicking off your Monday with us and have a great week ahead.