On this week's S&P Global Commodity Insights' Market Movers Asia with Tan Shien Ern: Asian auto fuel demand is expected to rise in the coming weeks as governments take steps to bring down retail prices. (00:20)
Other highlights from Asia's commodity markets:
*Easing of lockdowns in China is expected to boost steel demand (00:58)
*Grain traders expect India may further relax wheat export policy (01:54)
*Strong demand from India supports Asian thermal coal prices (03:00)
This week: Spotlight is on demand from China as Shanghai announces plans to ease lockdowns, market participants are hopeful that India may announce further relaxation in wheat exports, palm oil prices in focus after Indonesia lifts export ban and strong demand from India is expected to support Asian thermal coal prices.
But first, auto fuel demand in Asia is expected to rise heading into the peak summer driving season, as governments remove COVID-19 restrictions. However, middle distillate marketers said consumer sentiment remains extremely fragile as retail diesel and gasoline prices have surged. This has exerted pressure on governments to subsidize fuels to help reduce the cost burden on consumers. India, Indonesia and South Korea have announced steps that will bring down retail fuel prices. In Vietnam, oil traders are expecting the country's finance ministry to propose a reduction in the environment tax on diesel and gasoline.
In metals, steel markets will be keeping an eye on the pace of recovery in key steel consumption sectors such as manufacturing. This comes after Shanghai, China's major economic center, announced plans to lift the lockdown in a phased manner. Manufacturing activity in the country, especially in Shanghai and nearby areas, has been gradually recovering over the last week, but the pace remains slow. Markets will be watching if China's steel demand picks up in the coming weeks. Demand has remained dismal since the COVID-19 outbreaks in March-April, leading to a supply glut in China's steel markets.
China's primary aluminum prices are expected to remain volatile in the coming week after a brief rebound seen recently. Pressure on domestic prices continues amid concerns about idle capacity coming online in droves and commissioning of new projects.
In agriculture, market participants are hopeful that India may further relax its wheat export policy and allow more shipments in coming days. India had announced a wheat export ban earlier this month leading to a sharp increase in global prices. However, it allowed some exports against pending contracts last week after domestic prices declined sharply. Indore, a key physical market in India, saw wheat prices fall by nearly $77 per metric ton in a week since the ban was announced.
In palm oil, vegetable oil markets will keep a close eye on Malaysian palm oil prices for cues with larger rival Indonesia set to resume palm oil exports from today. With Indonesia's return to the market, a big supply uncertainty has ended but Malaysia's tapering production and labor shortages continue to cast a shadow over vegetable oil supplies.
That brings us to our social media question for the week: Will global vegetable oil prices fall this week as Indonesia resumes palm oil exports? Share your thoughts on Twitter and LinkedIn.
Lastly, in the thermal coal market, demand from India remains firm as the country faces one of the hottest summers, which has resulted in an uptick in power demand. Indian government has directed power producers to speed up imports to hedge against supply shocks. Traders expect to see Chinese seaborne demand for low-cv coal as lockdown restrictions begin to ease in the country.
And that's a wrap for this week's Market Movers Asia. Thanks for kicking off your Monday with us. Have a great week ahead!