Spot LNG prices surged to levels not seen since January on robust early winter demand from China. Will the market see a repeat of last year's Q4 rally?
Meanwhile, oil traders are expecting hikes in Saudi Aramco's and Abu Dhabi National Oil Co.'s official selling prices, as well as in Indonesia's contract prices.
Finally, editor Edwin Loh also looks at the potential impact of China's Golden Week holiday on energy and commodity markets.
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Video Transcript
In this week's Platts Market Movers Asia highlights: all eyes on LNG prices after last week's rally on China's winter buying, oil traders are expecting hikes in Saudi Aramco’s and ADNOC’s official selling prices; the impact of China’s Golden Week holiday on the energy, petrochemical and shipping markets, as well as the impact of rainfall on the Australian wheat market.
First up, the recent Asian LNG price rally stokes concern of sustainability. The JKM broke through the $8 mark last week, as spot LNG prices surged to levels not seen since January on robust early winter demand from China.
With current prices well above term parity level, do you expect a repeat of last year’s Q4 rally? Send us your thoughts on Twitter with #PlattsMM.
It’s worth noting that major importers China and South Korea are on a week-long holiday, while buyers watching for a possible pull-back in prices.
In crude, major producers including Saudi Aramco and Abu Dhabi National Oil Company will be announcing their new monthly official selling prices this week.
With a stronger Dubai market structure in September, there is expectation that Saudi Aramco will raise OSP differentials for crude grades loading in November and destined for Asia by around 30-40 cents per barrel compared to October prices.
ADNOC is also expected to hike September OSP differentials for its Murban and Das Blend grades, given that Asian buyers have recently paid hefty premiums for light sour Persian Gulf crude.
In Indonesia, upstream regulator SKK Migas is also expected to announce monthly selling prices for cargoes loaded in September. September ICP differentials for some of Indonesia's crude grades could to rise on month, supported by strength seen in Asia's light and middle distillate refining margins over the past few weeks.
Traders in the shipping industry expect slow market activity due to the Golden Week holiday. This could mean flat to lower freight rates for Supramax, Panamax and Capesize vessels.
The week-long holiday is also expected to slow down activity in the petrochemical market.
In addition, Shandong Hualu Hengsheng Chemical last month started up its methanol plant in Shandong province, which will lengthen methanol supply in East China in the fourth quarter, or at least until its downstream MEG plant starts up sometime in mid-2018.
And finally, in agriculture, rainfall in Western Australia over the past weeks has nudged farmers to finally let go of their wheat stocks as bearish sentiment seeped into the market. Since the beginning of September, the FOB Western Australia price for old crop Australian Premium White wheat has increased by almost 10%, but has shed $4.5 just in the last 2 days, and more declines are expected as the weather improves.
That’s it for this week. Thanks for kicking off your Monday with us and have a great week ahead.