Markets in Asia open with eyes focused on the two-day trade talks between the US and China. Top energy and agriculture officials from the US are part of the delegation attending meetings in Beijing Monday and Tuesday. Commodity markets will be on the lookout for whether any concrete measures will result from these discussions.
Meanwhile, Chinese oil demand is expected to be lower than usual in January as the country's independent refiners were awarded smaller quotas than last year. Crude grades like Russia's ESPO and Middle Eastern crude oil could be impacted.
Spot demand for LNG in Asia is also expected to be slow due to warmer-than-normal temperatures and adequate inventories.
And finally, in thermal coal, Chinese authorities have yet to officially lift import restrictions on thermal coal. Market sources expect demand to pick up before the Lunar New Year as end-users tend to stock up before the long holidays.
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This week, markets will keenly watch the series of meetings to starting today in Beijing between trade rivals US and China which impacts price, demand and supply of several commodity groups including agriculture, steel and oil products.
The US and China will hold discussions at the vice ministerial level this Monday and Tuesday. The talks come after stock markets in both countries have taken a beating. Leaders of both sides have recently spoken positively about the possible outcome of the talks. Commodity markets will be on the lookout for whether any concrete measures will result from these discussions. Market participants said the meeting will likely provide some clues about this year's energy trade flows between the two countries.
Will US and China be able to resolve their trade conflicts in this round of discussions? What is the biggest commodity group to see an impact? Share your thoughts on Twitter with the hashtag PlattsMM.
Next, upstream oil output in Southeast Asia is expected to slow down in the aftermath of tropical storm Pabuk, which gained traction over the week, especially in the Gulf of Thailand.
Meanwhile, oil demand in China is expected to be lower than usual in January as the country's independent refiners were awarded smaller quotas than last year. Crude grades like Russia's ESPO and Middle Eastern crude oil could be impacted.
Russia's ESPO blend is the most popular feedstock grade for China's independent refiners and spot differential for the Far East Russian grade may face a significant downside pressure as major customers from China will likely cut back on purchases due to the lower import quota allocations. West African and other arbitrage crude grades imported by independent refiners could also be lower this month. China's trading activity is expected to pick up pace after the Lunar New Year in early February.
Also slow this week, spot demand for LNG in Asia. Winter demand from Northeast Asian will be limited with inventories adequately stocked and warmer-than-normal temperatures.
Meanwhile, ships carrying Australian thermal coal that were delayed from entering Chinese ports have started to arrive this week. Authorities in China have yet to signal they have officially lifted import restrictions for thermal coal, however. Market sources expect demand to pick up before the Lunar New Year as end-users stock up before the long holidays.
And that's all we have for this week. Thanks for kicking off your Monday with us and have a great week ahead.