The highlights in Asia this week: activities in several markets are expected to be subdued as China's eight-day holiday draws near, tanker freight rates outlook bearish, and winter stocking activities seen to keep the seaborne thermal coal markets busy.

But first, Asian refiners are finding more reasons to reshuffle their oil product slate and slash jet fuel output, as industry experts maintain a bearish outlook on the aviation front, with international flights still heavily curtailed following the resurgence of COVID-19. Major refiners across East Asia including South Korea's GS Caltex and Thailand's PTT said they are planning to slash their Q4 jet fuel production volume by at least 35% from the same period last year and around 10% less than their Q3 output.

As this graph shows, the jet fuel market structure has recovered from the trough around April and May, but it remains under pressure. The International Air Transport Association said passenger travel so far this year has plunged 92% from 2019 levels. In a recent report, the Centre for Asia Pacific Aviation said that the aviation industry is "headed for a previously unimagined level of disruption" in the next few months. Continued lockdowns and travel restrictions are expected to keep a lid on jet fuel prices with vaccines and effective COVID-19 spread control measures presenting the only glimmer of hope.

Now, many Chinese oil traders are expected to be absent from international market during the country's Golden Week holidays. However, domestic demand for oil products such as gasoline and jet fuel are expected to witness an uptick in the coming days, with holiday trips during this period likely reduce inventories. China's refiners capped jet fuel output at 3.42 million mt in August, a 27.6% year-on-year reduction, to keep domestic inventory at comfortable levels, data from National Bureau of Statistics showed.

Trading is also expected to be subdued in the metals market ahead of the holidays. But the steel market will be watching the data on China's manufacturing performance for August which will be released later this week. Recent macroeconomic data had suggested that China's post-Covid recovery is starting to ease. Weaker steel prices are squeezing margins and putting pressure on raw material prices. Seaborne iron ore prices fell to around $115/dry mt delivered to China last week, down around 11.5% from the week before.

With the market slowing ahead of the holidays, observers doubt there will be much price upside before activity resumes after the break.

This brings us to our social media question of the week: Will iron ore prices weaken before the holidays? Share your thoughts with the hashtag PlattsMM.

Meanwhile, coal traders are expected to stay active in the first half of the week to take position for cargoes loading in November and December. We're also observing some post-monsoon demand from India, which could lend support to prices.

In petrochemicals, Asian polyethylene faces oversupply concerns over weak demand and new capacities. Asian PE price may soften during the holidays due to weak demand in early October, sources said.

And finally in shipping, the Long Range II clean tanker freight looks headed towards a two-month low in the next few days as lack of LR2 size cargoes in the Persian Gulf is resulting in the piling up of ships. Refineries are producing fewer products and inter-region trade has slowed down drastically and is mostly taking place on the smaller Medium Range tankers. With the coronavirus pandemic still raging, global refining is forecast to hit a seven-year low in 2020, which in turn is reducing demand to move oil products on tankers. However, since the freight of smaller ships is much higher than the Long Range II ships, some of the parcels may now be combined together to load on the bigger ones.

Thanks for kicking off your Monday with us, and have a great week ahead.