On this week's Platts Market Movers Asia with Editor Tess Tseng: refiners and petrochemical producers in the region, among the biggest customers of Iranian oil prior to the sanctions, are looking forward to a possible resumption in Iranian crude and condensate imports.
More highlights in commodity markets:
*China slaps consumption tax on light cycle oil and mixed aromatics
*Global benzene price spreads narrow
*Mixed views on LNG prices after the benchmark Platts JKM hit the $10/MMBtu mark
*Sugar traders await Vietnam's antidumping policy update
Details on S&P Global's flagship Sustainable1 event: Accelerating the Transition to Sustainability
This week, a surprise consumption tax in China, global benzene price spreads narrow, and Vietnam's antidumping policy looms over sugar imports.
But first, excitement is in the air. More and more Asian refiners and petrochemical makers are gearing up for a possible resumption in Iranian crude and condensate imports.
This, after Iran's President Hassan Rouhani last week said that a "main agreement" has been reached following talks over reinstating the nuclear deal. Rouhani said US has broadly committed to lifting its sanctions targeting Iran's oil, petrochemical, shipping, insurance and banking sectors, though final details have yet to be settled. US, Iranian and European negotiators will convene this week for a fifth -- and what they hope will be the final -- round of talks.
South Korean, Chinese and Japanese refiners and petrochemical producers are especially excited about the potential resumption in Iranian oil trades. They were among the biggest customers of Iranian oil prior to the sanctions. And they are looking forward to economical crude and condensate options that may be provided by the Persian Gulf producer.
Refiners and traders in Northeast and Southeast Asia have been reviewing Iranian crude official selling price differentials and Platts South Pars condensate assessments to analyze the adequate market value of Iranian grades.
With Iran scheduled to hold its presidential election June 18, S&P Global Platts Analytics expects the nuclear negotiations to reach a framework deal this month, with full oil sanctions relief by September.
What are your thoughts on the potential resumption in trading of Iranian Oil? Join the conversation on social media with the hashtag PlatsMM.
Meanwhile, Chinese refiners are poised to ramp up gasoil and gasoline production over the coming days and weeks. Beijing's surprise move to slap a consumption tax on imports of light cycle oil and mixed aromatics will force the fuel producers to boost middle distillate output at home.
The consumption tax on the two imported materials will be imposed from June 12. With growing incentives to produce more gasoil and gasoline domestically, Chinese refineries will likely step up feedstock crude oil procurement. Buoyed by this expectation, the benchmark Platts Dubai crude price structure staged a strong rally in recent trading sessions.
In petrochemicals, global demand for FOB Korea benzene has faltered. Spreads between FOB Korea and delivered prices in the US and Europe have started to narrow. The current backwardated market structure across the benzene markers were discouraging imports. Freight rates were also on the rise, further affecting workable price spreads.
In LNG, we're hearing mixed views on LNG price expectations for the coming days. This, after Platts JKM – the benchmark for LNG spot prices in Asia - breached the $10/MMBtu mark last week. Buyers are on the sidelines, waiting for the right opportunity to step in. At the same time, supply of LNG continues to be plagued by several ongoing uncertainties relating to projects in Indonesia and Australia.
Meteorological agencies in Japan and South Korea are forecasting average to higher than average temperatures in June. This traditionally supports LNG demand for cooling needs.
In agriculture, Asian sugar traders are facing growing uncertainty ahead of Vietnam's antidumping policy review and announcement in June. Market sources have noted said that the rise in domestic sugar prices could suggest Vietnam is running low on stocks, with limited access to Thai-origin sugar.
Vietnam imposed antidumping duties on imported Thai sugar after a surge in imports affected the domestic industry. Vietnamese buyers have pivoted towards importing sugar of other ASEAN origins, including Indonesia and Malaysia.
And finally, S&P Global's inaugural flagship Sustainable1 event kicks off its Asia Pacific segment on May 26. As the need for urgent climate action intensifies, Sustainable1 will dig deep into the three key themes of measuring progress, achieving net-zero, and improving transparency. Platts plays a key role in S&P Global's company-wide initiative to provide essential intelligence to accelerate the transition to a low carbon, sustainable and equitable future, with its hydrogen and carbon price benchmarks.
Thank you for joining us this Monday, and have a great week ahead.