Factbox: Commodities halt slide as global equity rebound mitigates coronavirus concerns

Commodity markets were mostly higher Tuesday as an uptick in global equity markets helped allieviate some demand growth concerns amid the further global spread of the coronavirus.

Still, there is a large amount of uncertainty regarding the outbreak and its impact on the global economy and oil demand.

Globally, the number of confirmed cases has risen to 20,647, with 20,471 of those in China, according to the World Health Organization Tuesday. At least 425 deaths have been attributed to the virus inside China, according to China's National Health Commission.

With airlines canceling flights into and out of China, and businesses closing stores in infected areas, GDP is expected to take a hit. S&P Global Platts Analytics' best-case scenario sees China's GDP dropping 0.8% in the first quarter, while global GDP growth is 0.1% lower for 2020.

Platts Analytics' worst-case scenario shows a drop of 4 million b/d in oil demand in February, while its best-case scenario shows a drop of 1.5 million b/d.

In oil markets, Dated Brent has fallen roughly 17% since January 20 to be assessed by Platts at $53.60/b Tuesday.

OPEC and its allies ended the first half of a two-day technical committee meeting Tuesday with no pronouncements on new production cuts, sending oil futures lower in US trading.

"Platts Analytics believes a 1 million b/d headline cut through 2Q is a reasonable expectation," said Shin Kim, Analytics head of supply and production. "A 1 million b/d headline cut would amount to a 600,000 b/d decline in supplies from here, as Saudi Arabia is already producing 400,000 b/d below their allowed quota."

China's ambassador to OPEC, Wang Qun, said that travel bans, closed borders and trade restrictions imposed in the wake of the coronavirus outbreak were politically motivated and were contributing to the destabilization of the global economy.

Northeast Asian LNG prices hit a fresh all-time low Tuesday, but key metals indexes moved higher.

PRICES

Oil

**Dated Brent was assessed by S&P Global Platts at $53.60/b Tuesday, up 8 cents/b on the day, but still down $10.82, or 17%, since January 20.

**Angolan and Rupublic of Congo crude grades are under pressure due to the lack of demand from China. Platts assessed Dalia at a 25 cents/b premium to Dated Brent Tuesday, down from a $1.85/b premium January 24.

**The Singapore jet crack spread against Brent ended Tuesday at $7.61/b, up from $7.02/b Monday but still down 33% from January 20, Platts data shows.

**The Rotterdam jet fuel crack against Brent ended Tuesday at $10.91/b, down from $14.17/b January 20, but up from $9.97/b on Monday. The US Atlantic Coast crack ended at $11.38/b, down from $14.18/b January 17

LNG

**The Platts JKM, the LNG price benchmark for the Northeast Asia region, fell to a fresh all-time low for a second straight session to be assessed at $3.36/MMBtu Tuesday. Prior to this week, the previous low was $3.65/MMBtu assessed on May 26, 2009.

Metals

**The most active May rebar futures contract on the Shanghai Futures Exchange closed at Yuan 3,3312/mt, up Yuan 79/mt from the day prior but still down 8.1% from recent high on January 20.

**Platts assessed the 62% Fe Iron Ore Index at $83.05/dry mt CFR North China Tuesday, up $3.25/dmt from Friday.

**The London Metal Exchange three-month copper price ended $13.50 higher Monday at $5,6010/mt. Still, that was down $669.50, or 11%, from January 20. Copper is often seen as a barometer for global economic health.

Shipping

**Freight for VLCCs on the USGC-China route has dropped 35% from January 21, falling to levels not seen since mid-September.

**The USGC-China VLCC (basis 270,000 mt) route saw a drop of $550,000 Tuesday to be assessed at lump sum $7.25 million. Freight was last assessed lower on September 13.

**Delays in loading and delivery of cargoes in the tanker, dry bulk and container shipping segments are being reported due to ships being forced to sit idle amid a lack of crew availability due to stringent quarantine checks.

TRADE FLOWS

Oil

**OPEC and its allies ended the first half of a two-day technical committee meeting Tuesday with no pronouncements on new production cuts.

**Japanese airlines are moving to join other Asian carriers in reducing the number of flights to China.

**All Nippon Airways and Japan Airlines said Tuesday that they are suspending some of their flights to Beijing and other Chinese cities because of massive booking cancellations because if the coronavirus outbreak. ANA and JAL also announced suspensions of some China routes.

**The UAE said Monday that it will suspend all flights to and from cities in China, except Beijing, starting February 5, and Oman's Public Authority for Civil Aviation banned all civil flights between China and the sultanate starting February 2.

**Key international airlines including Delta, British Airways, Lufthansa, American Airlines, United Airlines, Swiss International Air Lines, Austrian Airlines, Saudi Arabian Airlines, and Qatar Airways, suspended or reduced flights due to the outbreak.

**Platts Analytics worst-case scenario shows a drop of 4 million b/d in oil demand in February; its best-case scenario shows a drop of 1.5 million b/d in oil demand for February.

**Industry experts and market analysts have recently revised down their forecasts for China's refinery throughput in February and March by 600,000 b/d to 1 million b/d, with crude oil imports set to slow down accordingly in April and May.

**China's Sinopec recently slashed overall crude throughput by about 13% and its refineries across China are currently operating at minimum run rates in February, industry and company sources told S&P Global Platts Monday.

Metals

**Met coal and iron ore trucking restrictions in Tangshan, China were lifted Sunday evening, a Caofeidian port authority source said Monday.

**But restricted inland road access have resulted in delivery delays and supply concerns for bauxite and alumina, sources said. Market talk Tuesday was that some alumina refineries are planning to, or have already started curtailing output due to bauxite supply issues.

**China is the world's biggest steelmaker, producing 996.3 million mt of crude steel in 2019, up 8.3% on 2018 and accounting for 53.3% of global output, a growing share, according to the World Steel Association.

**China's car production and sales will be impacted by the coronavirus in the first quarter, denting demand for auto sheet -- but the widespread closure of public transport during the crisis could incentivize new car purchases once things return to normal, S&P Global Ratings analysts said Monday.

**China's auto sector accounts for around 6% of the country's total steel consumption, Platts estimates. The China Iron & Steel Association has forecast that China's total steel consumption will grow by 2% this year to just under 890 million mt.

**The association has predicted that China's passenger car production and sales will decline by 2% this year, which would mark the third consecutive year of declines in the sector.

**A temporary fall in Chinese steel production and demand due to the outbreak and related restrictions could lead to higher steel production elsewhere and a buildup of inventories that may weigh down global steel prices, according to analysts at brokerage firm Jefferies.

**China is the world's biggest iron ore consumer, taking more than half of seaborne supplies.

Shipping

**Delays in loading and delivery of cargoes in the tanker, dry bulk and container shipping segments are being reported due to ships being forced to sit idle amid a lack of crew availability.

**Singapore, the world's largest bunkering port, has had many resident Chinese nationals returning home from the Lunar New Year holiday. Their return to work, which included crew on ships, workers at ports, shipyards and maritime technicians, is now being delayed due to health inspection and quarantine checks.

**Shipowners who have opted for scrubber installations to comply with the International Maritime Organization's global low sulfur mandate are assessing the impact of the coronavirus outbreak amid the potential for further delays in scrubber fitting programs.

**According to Platts Analytics, about 2,200 ships with scrubbers installed were operational globally in January, which was expected to rise to 3,500 ships by year end, with more upside potential in 2021.