New York — Commodity markets continued to slide Monday as the spread of a coronavirus outbreak caused lingering concerns about the disease's erosion of demand growth.
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Globally, the number of confirmed cases has risen to 17,391, with 17,238 of those in China, according to the World Health Organization.
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 its worst-case scenario sees the country's GDP tumbling by 3%.
In oil markets, Dated Brent has fallen roughly 17% since January 20 to be assessed by Platts at $53.52/b Monday.
The price drop has spurred OPEC into action. OPEC and its allies are set to hold a delegate-level technical committee meeting this coming Tuesday and Wednesday to potentially coordinate deeper production cuts.
Other commodities have been bearish as well, with Northeast Asian LNG prices hitting an all-time low Monday, and Chinese steel futures tumbling roughly 8%.
**Dated Brent was assessed by S&P Global Platts at $53.52/b Monday, down $3.15 on the day, and down $10.90, 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 90 cents/b premium to Dated Brent Monday, down from a $1.85/b premium January 24.
**The Singapore jet crack spread against Brent ended Monday at $7.02/b, down from from $11.34/b January 20, Platts data shows.
**The Rotterdam jet fuel crack against Brent ended Friday at $9.97/b, down from $14.17/b January 20, while the US Atlantic Coast crack ended at $10.71/b, down from $14.18/b January 17.
**The Platts JKM, the LNG price benchmark for the Northeast Asia region, fell to an all-time low Monday to be assessed at $3.512/MMBtu. The previous low was $3.65/MMBtu assessed on May 26, 2009.
**The most active May rebar futures contract on the Shanghai Futures Exchange closed at Yuan 3,233/mt, down Yuan 267/mt, or 7.6% from the previous trading session on January 23. May hot rolled coil futures fell by a similar Yuan 275/mt, or 7.8%, to close at Yuan 3,246/mt.
**Platts assessed the 62% Fe Iron Ore Index at $79.80/dry mt CFR North China Monday, down $2.75/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.
**Freight for VLCCs on the USGC-China route has dropped 18% over the last week, falling to levels not seen since end-September.
**The USGC-China VLCC (basis 270,000 mt) route saw a drop of $200,000 Monday to be assessed at lump sum $7.8 million. Freight had not been assessed under the $8 million mark since September 25.
**OPEC and its allies are set to hold a delegate-level technical committee meeting Tuesday and Wednesday to potentially coordinate deeper production cuts.
**Arab airlines are starting to halt flights to China. National flag carrier Saudi Arabian Airlines temporally suspended all flights to China as of Sunday, while Qatar Airways halted flights starting Monday.
**Key international airlines including Delta, British Airways, Lufthansa, American Airlines, United Airlines, Swiss International Air Lines and Austrian Airlines, suspended or reduced flights due to the outbreak.
**Platts Analytics worst-case scenario shows a drop of 2.6 million b/d in oil demand in February, and a 2 million b/d decline in March.
**Platts Analytics best-case scenario shows a drop of 900,0000 b/d in oil demand for February, and a 650,000 b/d decline in March.
**Platts Analytics best-case scenario shows global jet fuel demand declining by 618,000 b/d in February, while its worst-case scenario shows a decline of 1 million b/d.
**In its best-case scenario, Platts Analytics assumes an almost complete shutdown of Hubei province's transport, but - significantly - little else in China's road transport, for February and March. It also assumes the aviation business will be severely curtailed in China and, to a lesser extent, the rest of Asia over the same period.
**In its worst-case scenario, Platts Analytics assumes the whole of China's road transport system will be vastly reduced, with up to 23% of passenger and freight trips being canceled across the country in February. It also assumes China's aviation demand will drop by an unprecedented 50% in the same period.
**The jet market is currently subject to a number of bearish factors. It is in a period of low demand and the upcoming refinery turnaround schedule that usually tightens the market is expected to be smaller and more spread out than usual, limiting its bullish impact.
**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.
**The outbreak has further dampened demand growth expectations in the world's fastest growing LNG importer.
**If reduced industrial activity across Hubei Province extends through the end of February, it would reduce Chinese LNG demand by 5%-7% relative to the Platts Analytics base case. That would drive Chinese LNG imports lower.
**While coal to gas switching in the residential sector has played a large role in China's recent LNG demand growth, the driving engine behind the country's gas demand remains the industrial sector.
**Between 60% and 70% of China's total LNG imports are ultimately destined to end users in the industrial sector, depending on the degree of weather related demand.
**Hubei Province sources regasified LNG from Shanghai, thus Shanghai's LNG imports can be used as a proxy for LNG imports in the affected region.
**Met coal and iron ore trucking restrictions in Tangshan, China were lifted Sunday evening, a Caofeidian port authority source said Monday.
**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.
**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.
Dubai Oil & Energy Forum | March 9, 2020 | Dubai, United Arab Emirates
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