In this week's Market Movers Asia with Stuti Chawla:
- Supply glut weighs on Asian LNG prices
- Demand to determine price direction in Asian thermal coal market
- Asian buyers look at narrowing Brent-Dubai price trend
- Aluminum markets await Yunnan smelter resumption
- Palm oil demand may pick up on falling prices
This week, lower LNG prices are likely to bring relief for Asian importers. The possibility of record high summer temperatures in parts of Asia could drive demand from the power sector and support LNG prices, but the market is skewed to the downside due to a seasonal supply glut.
In Asian thermal coal, production is likely to rise in Indonesia. It remains to be seen if the domestic industrial demand could offset the weak purchases from Indonesia’s traditional export markets.
Asian crude importers will be aiming to make the most of the narrowing Brent-Dubai price spread to take ample US crude cargoes. The Brent/Dubai Exchange of Futures for Swaps Spread, a key indicator of Brent's premium to the Middle Eastern benchmark, has averaged 1.91 dollars per barrel to date in the second quarter and is on course to set the lowest quarterly average since the first quarter of 2021.
In metals, aluminum market participants await the resumption of production at Yunnan smelters, which are currently closed due to severe water shortages that hampered hydroelectric power supply. While the smelters are unlikely to restart anytime soon, a few of them might resume in June if rains increase.
In agriculture, demand for palm oil is expected to accelerate this week, as price-sensitive buyers will be looking for opportunities after a near 20% fall in the price in the last two months.
I am Stuti Chawla, thank you for kicking off your Monday with S&P Global Commodity Insights.