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Market Movers Asia, July 18-22: Markets see sluggish demand in metals, petrochemicals

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Assistir: Market Movers Asia, July 18-22: Markets see sluggish demand in metals, petrochemicals

  • Apresentando
  • Arveen Rajula
  • Commodity
  • Agricultura Carvão Petróleo Metais Produtos petroquímicos
  • Comprimento
  • 03:22

On this week's S&P Global Commodity Insights' Market Movers Asia with Arveen Rajula: China's independent refiners are expected to increase their runs in July amid holiday driving demand. (00:15)

Other highlights from Asia's commodity markets:

*Sluggish demand seen in Asian petrochemical markets (01:03)

*Influx of Russian coal is expected to keep Asian prices under check (01:33)

*China faces metals' supply glut (02:12)

*China's wheat harvest is in focus (02:55)

Visualizar Transcrição Integral

This week: Russian thermal coal influx keeps Asian prices under check, many petrochemical markets see sluggish demand, China is facing a supply glut across metals like steel, aluminum and copper, and its wheat production is expected to rise this year.

But first, China's independent refiners are set to push their runs even higher in July, extending the trend seen in June. Strong driving demand during the holiday season and increased appetite for cooling during the summer season provides a robust earnings opportunity for the independent refiners.

Market participants expect more gasoline will be used in the coming weeks. This coupled with a fall in domestic product prices is expected to lift demand. This will encourage refiners to ensure that they keep most of their units running in the month. Only one refinery will remain offline in July.

Petrochemical gasoline blend stocks like xylene and toluene have seen sharp price falls in recent days amid shrinking gasoline margins. Markets are expected to continue seeing softening fundamentals in the days ahead.

Staying with petrochemical news, sluggish demand in the Asian benzene market is expected to continue. Weak fundamentals in several downstream markets led the decline in prices. High inventory in the downstream sectors discouraged producers from purchasing more benzene feedstocks.

In polypropylene, prices in the Asian market are expected to remain capped due to low buying interest and weak economic sentiment. Continued influx of South Korean-origin exports in Southeast Asia is currently exacerbating the current oversupply issue.

In thermal coal, influx of Russian coal is expected to keep Asian prices under check. Russia has already become the second largest supplier of thermal coal to India after Indonesia in June. Influx of high calorific value material from the Baltic region till the time the ban kicks in is likely to keep Asian prices under check.

Indonesian low-cv prices are expected to remain rangebound with lukewarm interest from China, India, Philippines, Thailand, and Vietnam. Market participants will also keep a close watch on Australian high-ash coal prices as wet weather conditions are causing supply disruptions from Newcastle.

In metals, China's steel markets continue to face a supply glut despite the fall in inventories at major trade hubs seen recently. This is because the pace of steel demand remains slow, while markets also tackle uncertainty around the debt-laced property sector.

Meanwhile, China's primary aluminum prices are expected to remain under pressure in the near term. Smelters continue to ramp up production at a time when demand has remained weak during the summer season. Copper also faces a supply glut and prices are expected to remain on a downtrend.

That brings us to our social media question for the week: When will the supply glut ease in China's steel markets? Share your thoughts on Twitter and LinkedIn.

In agriculture, grain markets are closely watching the ongoing summer wheat harvest in China, which is likely to increase marginally on the year to nearly 136 million metric tons.

China usually imports nearly 1 million metric tons of wheat annually for feed purposes mainly from Australia and the US. The likely increase in wheat output could lead to a decline in China's wheat imports.

Thanks for kicking off your Monday with us. Have a great week ahead.