Oil markets continue to assess Hurricane Harvey’s impact on the flow of crude and refined products into and out of the Gulf of Mexico. In Asia, sources are examining the storm's impact on gasoline supply. Related factbox: Refineries now facing brunt of Harvey-related flooding.
In petrochemicals, polypropylene and ethylene prices in the region have reached record highs. Markets are looking for signs if prices have peaked.
Meanwhile, thermal coal production in Indonesia this month is expected to be better as the weather has improved. Supply, however, continues to remain tight.
Senior editor Serena Seng 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 Platts Market Movers – Asia highlights: Hurricane Harvey’s potential impact on Asia’s gasoline market, tight ethylene supply and its impact on prices, plus a look at thermal coal supply from one of the world’s largest exporters – Indonesia.
Oil markets are assessing Hurricane Harvey’s impact on the flow of crude and refined products into and out of the Gulf of Mexico Monday. In Asia, sources are assessing Harvey’s impact on gasoline supply. The region’s gasoline market is currently underpinned by strong fundamentals with gasoline cracks and the front-month time spread likely to rally due to tightening supplies, accentuated by the onslaught of the hurricane.
Moving to LNG, the JKM price for October deliveries remains under pressure amid largely tepid end-user demand in North Asia. But the spotlight is on changes in Chinese restocking demand -- end-users could re-enter the market for early winter procurement.
In petrochemicals, China’s polypropylene price hit a two-year high following a 6% surge in PP futures since the start of August. This trend follows a broad rise in China’s commodity futures, and is in line with improving fundamentals as the polypropylene market heads into higher demand season in September.
Traders caution, however, that prices may have peaked and could be at risk of a pull-back.
So here’s our social media question this week: Will polypropylene prices continue to surge this week? Tweet us your views with #PlattsMM.
Still in petrochemicals, ethylene prices in Northeast Asia surged to a five-month high due to the shutdown of Formosa’s No. 3 steam cracker from mid-August to end-September in Taiwan. The market is expected to stay firm with strong downstream styrene monomer market as a key supportive factor.
On to thermal coal, spot cargo availability remains limited despite improved weather. Suppliers are allocating their additional tonnage to fulfill shipments that were postponed from June and July due to rain. Moreover, some sellers are expecting Indian demand to return when the monsoon season ends in mid-September. This could provide some support to prices next month.
The agriculture market meanwhile is keeping an eye on the result of Thailand’s B quota tender later this week for hi-polarization and J-spec sugar for the next season. This will set the tone for the cash premium level that millers will set for the first-hand market. Higher trading volumes for raw Thai sugar are also expected once the tender is concluded.
And in shipping, Capesize rates have lost momentum after an uptrend in the past few weeks as many vessels held back in anticipation of stronger freight rates. Sentiment is now mixed – some participants feel the market will remain weak unless there’s renewed tonnage demand from Brazil. Others expect rallying freight derivative prices to revive freight rates.
What other factors could boost freight rates? Share your thoughts with #PlattsMM. Thanks for kicking off your Monday with us and have a great week ahead!