Assistir: Market Movers Asia, Aug 1-5: Gasoil in focus amid falling Asian gasoline cracks, uncertain Russian gas supplies

This week, palm oil prices in focus as Indonesia starts B40 biodiesel road trials, inflows of Russian coal has hit demand for Indonesian coal, mixed outlook for Asian benzene and China's aluminum demand is expected to remain weak.

But first, a sharp decline in Asian gasoline cracks is expected to raise alarm bells among regional automotive fuel producers. Many refiners across Asia are expected to tweak their oil product slates and middle distillate export strategies to focus on higher margin products like gasoil. In fact, several South Korean, Thai and Taiwanese refiners have already started to put this plan into action.

This comes after Asia's benchmark gasoline crack fell to a 9-month low earlier in the month, S&P Global Commodity Insights data showed. Market participants expect that gasoil and kerosene consumption could significantly increase in the coming months. This is because power generation and heating requirements are expected to intensify in the winter, amid tightening Russian gas supplies.

Staying with Russian gas supplies, the deadline for stakeholders to decide whether they want to continue in Russia's Sakhalin 2 LNG project ended on July 30. This project exports nearly 11 million metric tons per year of LNG, which could be jeopardized. The main stakeholders in Sakhalin 2 are Gazprom, Shell and Japan's Mitsui and Mitsubishi.

Questions also remain on what happens to the LNG offtakers from Sakhalin including Japanese gas and power companies, South Korea's KOGAS, Shell and Taiwan's CPC.

In coal, Asian markets are seeing continuous inflow of tonnages from Russia. This is likely to curb the export sentiment of Indonesian mid-to-high calorific value thermal coal. Sporadic low-cv demand is expected to surface from China for Indonesian material for blending purposes. Supply from Australia is likely to remain tight through August as most miners are running behind schedule on their production targets owing to heavy unseasonal rains in July.

In metals, rise in Chinese domestic production and lackluster demand will continue to weigh on domestic prices. Chinese primary aluminum prices went past the crucial Yuan 18,000 per metric ton mark last week as market sentiments slightly improved after the US Federal Reserve announced another rate hike. China's running primary aluminum capacity is expected to rise further. But there are no signs of recovery in the property sector—the largest consumer for aluminum products.

That brings us to the social media question of the week: Will prices of Chinese primary aluminum fall below Yuan 18,000 per metric ton? Share your thoughts on Twitter and LinkedIn.

In petrochemicals, run rates among producers of downstream benzene derivatives would be the key to watch in the week, as that would indicate whether benzene could rebound in the fourth quarter. FOB Korea benzene physical marker has been relatively stable, but bearish demand has turned participants away.

The entire Asian styrenics supply chain was also bearish due to sluggish demand and supply glut in China.

In agriculture, Indonesia's launch of B40 biodiesel road trials after multiple delays will support palm oil in the near term. The B40 trials are using fuel comprising 40% palm oil-based content. Bargain buying from India and China, and a widening margin between palm and soybean oil could also support the market in the coming days.

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