Aluminum prices in China surged to a near six-year high last week amid production cuts at smelters. With further cuts expected from mid-November, how will prices be affected? How will sugar prices move after the cash premium for Thai refined sugar hit an almost five-year high last week? And what will come out of the OPEC/non-OPEC technical meeting? Associate editor Charlotte Rao explores these and other topics that may impact Asia’s commodity markets this week.
Join our conversations on Twitter - use #PlattsMM and connect with us.
Video Transcript
In this week’s highlights in Asia’s commodity markets: Aluminum prices at close to 6-year highs, sugar prices at close to 5-year highs, and Capesize freight rates their highest levels so far this year.
But first, in oil, OPEC and non-OPEC countries are expected to meet for yet another joint technical committee meeting later Monday. While they are meeting to decide whether to deepen production cuts to speed up market rebalancing, OPEC’s options seem limited.
However, Saudi Arabia's Oil Minister Khalid al-Falih recently said the possibility of continued production cuts was still on the table.
In China, aluminum prices surged to a near 6-year high last week amid production cuts at smelters. Further cuts are expected from mid-November, so prices are poised to rise further.
Here is what we want you to tell us via Twitter using #PlattsMM: How high do you think aluminum prices will go this week?
Similarly, in agriculture, market participants this week will be watching to see how much higher the cash premium for Thai refined sugar will rise after it hit an almost five-year high last week. Supply tightness has intensified towards the end of the crop year, while China's demand for sugar continues unabated.
Asia's thermal coal market is likely to see supply limited this week by floods in eastern Russia and ongoing strikes at Australian mines. Prices for 6,000 NAR coal have already passed $100 a tonne FOB, and could well rise further.
In LNG, the first train of the Wheatstone LNG terminal in Western Australia is expected to start production soon. The project has two LNG trains with a combined capacity of 8.9 million mt/year.
In petchems, Thailand's Bangkok Polyethylene has postponed a maintenance shutdown it had planned for mid-August at its No. 1 high density polyethylene line at Map Ta Phut. The decision is in line with the postponement of a turnaround at its upstream olefins unit to the fourth quarter of 2018.
In shipping, Panamax rates in the Asia Pacific are expected to remain supported this week as healthy Atlantic grain demand absorbs ships from the Pacific.
Capesize freight rates hit a year-to-date high late last week on all key iron ore routes to China from Australia, Brazil and South Africa. They are expected to remain supported this week by robust tonnage demand, a seasonal pickup and a firming freight derivative market.
Market participants believe the paper market is now playing catch-up with physical rates, resulting in both markets spurring each other on. Will paper markets continue to influence physical rates this week?
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!