Will export cuts announced by major OPEC producers lead to hikes in their official selling prices? How are scorching temperatures in North Asia affecting LNG prices? And what's driving the clean tanker market? Editor Sue Koh explores these and other topics that may impact Asia’s commodity markets this week.
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Video Transcript
Welcome to Platts Market Movers, your three-minute look at what the week ahead holds for the Asian Commodity Markets.
This week, major crude producers set to announce prices for September, LNG price rises amid hot weather in North Asia, and coal prices climb amid a strike in Australia.
First to oil, the market will be looking for clues of a possible tightening in supply. Major producers will announce their official selling prices this week.
Saudi Arabia, Kuwait and Qatar are expected to release their prices for September-loading crude cargoes, and Abu Dhabi, Malaysia, Indonesia and Brunei theirs for July.
Market expectations for Saudi Aramco’s differentials were mixed, with some tipping a small cut for cargoes heading to Asia, and others a small increase.
However, questions remain over whether the export cuts announced by the major OPEC producers will lead to hikes in their upcoming OSPs.
The Asian LNG market is keeping a close watch this week on the unexpectedly strong summer demand from North Asian end-users, such as Japan’s Tohoku Electric and China’s Huadian, which is due to scorching temperatures.
The JKM benchmark rose over 3% last week, and firm UK and crude oil prices, together with end-user demand for September cargoes could lift spot prices further this week.
In thermal coal, strikes at Glencore’s Australian mines are moving into their third month, with almost 2,000 hours of industrial action clocked up to date.
Exporters have raised their spot offers for August and early September loading shipments by around five dollars in recent weeks as a result.
In the clean tanker market, demand is seen firming this week as more naphtha loadings are requested at Middle East ports for deliveries to North Asia.
This follows the Long Range two chartering rate on the benchmark Persian Gulf to Japan route rising close to 25 worldscale points in the past two weeks.
From the Middle East towards Europe, inquiries for moving gasoil and jet fuel have also supported the rates. Such uptrend is presumed to continue this week, with ample fresh long-haul activity.
In petrochemicals, China's Yussen Chemical is expected to start commercial production at its new Huizhou MTBE plant in Guangdong province by August 20. Its output will be mainly marketed to the nearby Huizhou refinery for gasoline blending.
In Agriculture, the grade B ethanol market will be watching for movement in Brazilian ethanol prices this week. Asian grade B prices have been increasing since the Brazilian government announced a tax increase affecting gasoline and ethanol on July 21.
However, there is talk the government will reduce the tax on ethanol, creating uncertainty in the market. Most participants are expected to watch from the sidelines until more clarity emerges.
So, our big question this week is, will the Brazilian government throw the market a lifeline by reducing taxes on ethanol?
Tweet us your views with #PlattsMarketMovers. Thanks for kicking off your Monday with us and have a great week ahead.