In this week's Market Movers Americas, presented by Kelsey Hallahan:
* VLCC flotilla of US crude heads toward China
* Higher netbacks bolster US LNG feedgas demand
* NYMEX RBOB futures rise as hurricanes reduce refinery runs
* US hot-rolled coil prices approach $600/st
In this week's Market Movers: an armada of tankers loaded with US crude sails toward China, US LNG feedgas volumes recover amid European price strengthening and the extended outage at Cameron LNG, NYMEX RBOB gets a boost from lower US Gulf Coast refinery runs, and US hot-rolled coil prices approach heights last seen in January.
Starting off with crude oil flows …
A fleet of Very Large Crude Carriers loaded with US crude is en route to China as traders had booked cargoes this summer ahead of the Phase 1 one trade deal review.
About 21 million barrels departed the Gulf Coast for China over the last seven weeks, according to cFlow data.
The Chinese buying spree of US crude may continue during the Coronavirus pandemic following China's affirmation to the trade deal as the arbitrage for WTI into Northeast Asia remains open, according to Platts Analytics.
Turning to another kind of waterborne commodity …
US liquefaction terminal utilization has seen a healthy recovery since feedgas volumes bottomed out August 26. The recovery is expected to continue this week despite the ongoing outage at Sempra's Cameron LNG and the possibility of disruptions from a storm in the Gulf of Mexico.
With the US Henry Hub October contract now trading in the low $2/MMBtu range, and European gas prices finding support on the extended Cameron outage, LNG netbacks from the Dutch TTF have widened to near year-to-date highs.
This recent development could incentivize incremental spot LNG loadings in October. Cancellations of cargoes scheduled to be loaded on the Gulf Coast in October were previously said to be the fewest since May.
Meanwhile, in gasoline markets …
NYMEX RBOB futures have seen a sharp increase as the recent hurricane activity along the US Gulf Coast limits the region's refinery runs, threatening East Coast supply.
The US Gulf Coast remains the main source for East Coast RBOB supply, but inventories there have tightened in recent weeks as a veritable parade of tropical storms and hurricanes have taken refinery capacity offline.
S&P Global Platts Analytics does not expect US Gulf Coast offline crude distillation capacity to fall below the 1.64 million barrels per day seen in the week ended August 21, the week prior to the first refinery shutdowns ahead of Hurricane Laura, until the week ending October 23.
The supply tightness in the US Gulf Coast has helped push front-month RBOB futures up more than 10% from their September 8th lows, even as gasoline demand continues to trend downward.
Finally, turning to steel markets …
Limited availability and tight inventories could help US hot-rolled coil prices surpass $600 per short ton this week, marking the first time US HRC prices have crossed that threshold since January.
US hot-rolled coil prices have risen more than $150 since early August, as higher end-user demand coupled with planned mill outages pressured prices and lead times.
The average lead times for hot-rolled coil lengthened to 7 weeks as of September 16, achieving the longest level since late July 2018.
Buyers last week were debating the resiliency in flat-rolled sheet pricing, but noted that most mills were holding offers firm at $600.
For more on all the issues affecting commodity markets, check out Platts Live, a new section of our website that has been created for our customers to continue engaging with us, and each other. You can find it at the address displayed on your screen.
Thank you for kicking off your Monday with us and have a great week!