On this week's S&P Global Commodity Insights' Market Movers Asia with Melody Li: Asian refiners are expected to sharply raise their Middle Eastern crude intake following the latest OPEC+ decision to accelerate production hikes. (00:17)
Other highlights from Asia's commodity markets:
*China's gasoline and gasoil exports are likely to remain muted (01:00)
*China's stimulus measures, relaxation of COVID-19 lockdowns are likely to boost steel demand (01:48)
*All eyes are on Coal India's coal import tender (02:26)
*Spot trading in LNG market is expected to pick up (02:59)
This week: China's gasoline and gasoil exports are likely to remain muted on quota shortage, market eyes Indian coal import tender from major state-owned firm, and Asia-Pacific LNG market likely to see rise in spot trading activity after holidays.
But first, Asian refiners are expected to sharply raise their term Middle Eastern crude intake following the latest OPEC+ decision to accelerate production hikes through the summer. The refiners continue to maximize operating rates to fully capture lucrative middle distillate cracks, especially for diesel and jet fuel. Chinese end-users and some Indian refiners are widely expected to continue absorbing Russian crude.
At the same time, refiners in Taiwan, South Korea, Japan and Thailand would be able to take a decent share of the incremental OPEC supply, especially from Saudi Arabia and the UAE, over the coming trading cycles.
Meanwhile, China's gasoline and gasoil exports are likely to remain muted throughout the week and rest of the month. Beijing is hesitant to release oil products export quotas in large quantities because of its strong focus on domestic energy security. Market participants had expected Beijing to hand out about 26 million barrels of supplementary quotas for gasoline, gasoil, and jet fuel before end-May. However, there is still no official confirmation on the new export quota allocation, further raising the case for low June middle distillate exports.
That brings us to our social media question for the week: Will higher output by OPEC+ help tame rising crude oil prices in Asia? Share your thoughts on Twitter and LinkedIn.
Moving on to metals, demand from the manufacturing sector is expected to increase after COVID-19 lockdowns were lifted in Shanghai last week. The recovery, however, will be hampered by supply chain issues and longer-than-expected delivery schedules.
Iron ore futures on the Dalian Commodity Exchange hit a six-week high before the long weekend holiday in China that began June 3 amid government measures to support the ailing economy. A recovery in Chinese demand could have a positive impact on steel product prices in the second half of 2022.
In coal, market expects India's state-owned Coal India to issue a tender this week to import coal from other origins to avoid a shortage later this year. India's coal procurement is expected to be for the spot market and spread out over the next few months to increase stockpiles at power plants. In China, the reopening of Shanghai is expected to boost power demand and consequently, the demand for seaborne coal from Indonesia is expected to rise.
Finally, in LNG, the Asia-Pacific LNG market could see a pick-up in spot trading activity this week, as Chinese and Japanese firms return from their week-long holidays. Market participants will be closely watching the impact of EU's gradual ban on Russian oil amid expectations of restocking demand improving closer to the peak summer demand season. Despite limited downstream demand from North Asian end-users, market fundamentals have become more balanced due to interest for prompt deliveries in South Asia and Southeast Asia.
Thank you for kicking off your Monday with us. Have a great week ahead!