This week, markets await the release of monthly trade data from China for pricing cues, polyethylene margins under pressure, and Indonesian thermal coal prices look set to remain steady
But first, in oil, a lack of clarity in OPEC+ production plans for August is adding a layer of uncertainty to the Asian oil market this week, as the region looks to revive its economy after a pandemic resurgence.
The alliance on June 1 agreed to press on with plans to raise production by 840,000 b/d from July, but stopped short of discussing increases for August onwards.
With oil demand in Asia expected to pick up in the third quarter, and demand in the US and Europe already on an uptrend, analysts say the continuing restraint could lead to significant undersupply in the market.
Uncertainty over supply is being compounded by limited progress after weeks of talks on the Joint Comprehensive Plan of Action, where an agreement could open the floodgates for Iranian barrels into the market.
But with the timeline for an agreement far from certain, it is fears of an undersupplied market that continue to push oil prices higher in Asia.
However, the release of OPEC's monthly market report on June 10 and the IEA's on June 11, will provide some pricing cues this week, as will China releasing monthly data later June 7.
China's data for May will be closely watched as its independent refineries boosted imports of feedstock bitumen blend to a record high in the month.
Bitumen blend expected to become commercially unviable after a new consumption tax kicks in on June 12, prompting independent refineries to hunt for other feedstocks, such as straight-run fuel oil.
Light cycle oil and mixed aromatics inflows will also be affected by the new tax, which will make China more likely to rely on domestic production.
The iron ore market will also be looking closely at the Chinese data. Iron ore exports from major producers in Australia and Brazil have fallen this year, contributing to soaring prices, which hit a record $233/mt CFR China in May.
Prices have since hovered around the $200 mark, but with the outlook for steel uncertain and seasonal weather factors kicking in from June, the direction of iron ore prices this week is hard to discern.
This brings us to our social media question for the week: Do you think iron ore prices will fall this week? Share your thoughts with us on twitter with the hashtag PlattsMM.
In petrochemicals, new capacity and firming upstream prices are set to squeeze the margins for unintegrated producers of polyethylene this week, the most widely-used plastic for packaging.
With a wave of capacity coming online in the next six months, the market is expected to face a period of overcapacity and a cyclical trough.
And finally in coal, Indonesian prices are expected to remain steady this week, supported by supply tightness and strong seaborne demand from China. Pockets of inquiries have also surfaced from India, providing further support.
However, prices of Australian high-ash coal are expected to rise amid high demand from Taiwan, South Korea, Japan and Vietnam.
Thank you for kicking off your Monday with us. Have a great week ahead!