Faltering compliance with crude oil output cuts has prompted the OPEC/non-OPEC coalition to convene a meeting of technical experts for later Monday. Discussions are expected to focus on how to firm up member commitments to uphold their production quotas. Meanwhile, Asian LNG buyers are starting to enter the market to secure pre-winter supplies. And the thermal coal spot market is looking tight. Associate editor Eesha Muneeb explores these and other topics that may impact Asia’s commodity markets this week.
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Video Transcript
In this week’s highlights in Asia’s commodity markets: China's data for July expected to show a fall in crude imports, LNG buyers start pre-winter stockpiling, and the coal market reacts to improving weather in Indonesia.
But first, in oil, faltering compliance with crude output cuts has prompted the OPEC/non-OPEC coalition to convene a meeting of technical experts for later Monday. They will discuss ways to firm up member commitments to uphold their production quotas.
The meeting follows pledges by the coalition's monitoring committee to demand better compliance from flagging members – in particular Iraq -- and a warning from OPEC's de facto leader Saudi Arabia that it will not tolerate any country getting a free ride.
So here’s what we want you to tell us via Twitter with #PlattsMM: How can OPEC ensure compliance with its quotas?
Elsewhere, China is due to release its closely-watched preliminary crude import/export data for July on Tuesday. Here's the total imports over the past 12 months.
Platts’ trade flow software Cflow shows the country’s seaborne crude imports fell almost 18 percent on month in July. If tomorrow's data shows its total crude imports fell below 8 million barrels a day in the month, that would be for the first time since last November.
In LNG, buyers are starting to enter the market to secure pre-winter supplies. There are spot sell tenders available this week from projects in Russia, Africa and Southeast Asia.
In thermal coal, Indonesian producers are sticking to their offers despite a drop in bids as the weather improves after recent heavy rain. The spot market is also looking tight. Some shipments from June and July have been pushed to August.
In shipping, stronger iron ore prices in the region have caused Capesize freight rates to rally Vessel owners will probably expect the uptick in sentiment to continue this week.
Similarly, the trend for Panamax freight rates in the Asia Pacific is also expected to stay firm due to constrained supply.
In petrochemicals, Thailand's Bangkok Polyethylene plans to shut its No. 1 high-density polyethylene line at Rayong in mid-August for around 15 days of maintenance. The number 2 line at the same plant was last shut in May for two weeks.
In agriculture, our Platts CFR Ulsan grade B ethanol price has surged to an 11-week high at 560 dollars per cubic meters.
This is because sellers of Brazilian cargoes are maintaining high offers amid market uncertainty and a surge in the Brazilian real. Will other countries such as Pakistan be able to provide an alternative?
What do you think? Remember to join our conversations on Twitter with #PlattsMM.
Thanks for kicking off your Monday with us and have a great week ahead!