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Agriculture | Energy | Coal | Oil | Metals

Market Movers Asia, Jan 10-14: Markets await Indonesia's next move after coal export ban; omicron threat weighs

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Energy | Oil | Petrochemicals | Olefins | Polymers | Crude Oil

Asian Refining and Petrochemicals Summit

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Watch: Market Movers Asia, Jan 10-14: Markets await Indonesia's next move after coal export ban; omicron threat weighs

On this week's Platts Market Movers Asia with Associate Editor Nicholson Lim: Asian refiners are planning to reduce their term crude oil purchases and conduct more spot buys amid prolonged uncertainty due to the coronavirus pandemic. (00:16)

Other highlights from Asia's commodity markets:

*CNOOC is set to release its 2022 business strategy this week (01:33)

*China's steel exports are expected to rebound in this quarter (02:07)

*Asian thermal coal prices await Indonesia's next move on coal export ban (02:43)

*China's soybean crushers are likely to ramp up their purchases amid a bleak Brazilian soybean forecast (03:13)

View Full Transcript

This week: Asian thermal coal prices are awaiting clarity on Indonesia's coal export ban, a bleak Brazilian soybean forecast may see crushers in China ramping up their immediate purchases and China's steel exports are expected to rebound in Q1.

But first, major state-run and private refiners across Asia are planning to trim their term crude oil purchases and conduct more spot market trades in 2022 to balance both global demand and supply risks during the prolonged coronavirus pandemic.

Refiners across Northeast, Southeast and South Asia were cautiously optimistic that regional oil demand would extend the recovery trend in 2022. However, considering the impact of the omicron variant and the overall unpredictable nature of the pandemic, the end-users were hesitant to over-commit to fixed-term crude supply deals.

Feedstock managers and traders at eight major Asian refiners including ENEOS, BPCL, CPC Taiwan, SK Innovation, and PetroChina surveyed by S&P Global Platts in the first week of 2022 indicated that the companies would prefer to procure more crude from the spot market, rather than relying heavily on fixed-term supply deals.

The survey participants also unanimously agreed that major Middle Eastern official selling prices appear too expensive, prompting end-users to explore more economical options outside the Persian Gulf region.

Staying with oil, markets will closely track the fallout of the unrest in Kazakhstan and its impact on oil production. Another key development the markets will watch out for will be the release of the 2022 business strategy of China's listed offshore upstream company CNOOC on January 11. The strategy is expected to provide the first hint of CNOOC's production and expenditure outlook. In addition to domestic and overseas production, CNOOC's energy transition budget will be closely watched.

That brings us to our social media question for the week: Would emerging variants affect crude oil prices as nations adapt to live with COVID-19? Share your thoughts on Twitter and LinkedIn with the hashtag PlattsMM.

Next up, in the metals sector, China will release steel export and import data for December on January 14. Market participants expect the export volume to be steady from November with the overall export volume in 2021 higher than 2020. However, the market anticipates China's steel exports to rebound in the first quarter of 2022.

In nonferrous metals, China's primary aluminum price might continue to hover at current elevated levels in the near term. Domestic smelters are recovering their idle capacities, that were shut down over the past few months, but at a slow pace.

Moving to coal, Indonesia's coal export ban has muzzled activity in Asia's seaborne coal market with participants awaiting clarity.

Traders said that though regulations are expected to ease, prices of viable alternatives such as coal from Russia, Australia and South Africa could rise if the ban remains in place. Offers for India-delivered coal has risen sharply by 6 to 8 dollars per metric ton and even though buyers are not actively buying for now, demand could increase in case of a status quo.

In agriculture, soybean crushers in China are expected to ramp up their purchases in the coming weeks in anticipation of supply cuts and price spike. Amid a severe drought in southern Brazil – world's top soybean supplier, the market will be keenly looking at the upcoming monthly reports from the US Department of Agriculture and Brazilian national supply company- Conab. Various agricultural consultancies have already significantly cut the Brazilian soybean output forecast for 2021-22 crop year. Sizable reduction in output forecast is likely to stoke supply concerns and support prices across the globe.

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