The highlights on S&P Global Platts Market Movers in Asia, with News Editor, Agriculture, Asim Anand:
* Asian gasoline suppliers look for prompt opportunities to US
* Regional refiners shrug off Middle East allocation cuts
* Olefin supply concerns in Asia after Texas shutdowns on cold snap
* China's soybean demand to pick up as crushers return from holiday
This week: China returns to the market after a long holiday, and refiners focus on oil product management amid crude allocation cuts from the Middle East.
But first, in oil, refiners in South Korea and trading houses in Singapore are actively looking at possible trading opportunities to sell prompt jet and gasoline cargoes to the US this week should it urgently need to cover any shorts. This comes as the power crisis and oil supply disruptions there due to a recent cold snap start to ebb.
Middle distillate traders are also continuing to monitor the rise of Asian gasoline crack spreads, as a smaller-than-expected build in US gasoline stocks seen in recent data continues to underpin the US RBOB-Brent crack for multiple trading sessions. The Asian gasoline market has been on a bullish run since the start of last week, supported by gains in the US RBOB-Brent crack, after refineries there were shut due to freezing temperatures.
So, our social media question this week is: Will the latest winter freeze prompt the US to stock up on gasoline from Asia? Share your thoughts on Twitter with the hashtag PlattsMM.
The cold snap is also keeping petrochemical market players on their toes. Supply concerns are expected to continue spreading in Asia following the large-scale shutdown of several plants in Texas. Sources said olefins supply will be impacted the most, as around 50% of US cracking capacity was seen to have been affected by the severe winter storm.
Meanwhile, the region's key refiners in China, India, Japan and South Korea are unfazed by an upcoming drop in cargoes from the Middle East. Asian customers have received crude term allocation cuts for barrels loading in March from Saudi Aramco, while ADNOC has informed its buyers that nominations across its four crude oil grades will be trimmed by at least 10% next month. The cuts reflect OPEC's strong commitment to curbing supply through the first quarter.
Feedstock availability, however, is the least of Asian refiners' worries, as they shift their focus to oil product stocks management. Companies plan to limit their oil products output in the first half of 2021, with China and India expected to produce middle distillates volumes that are lower than pre-pandemic 2019 levels.
With trading in Asia back in full swing this week after the Lunar New Year holidays, China demand for soybeans is likely to pick up this week as crushers gradually resume operations. CBOT soybean futures prices, which have been oscillating in the mid- to high $13/bushel range since early February, are likely to receive support from China, with the world's largest soybean importer and processor widely expected to buys more beans from the US and Brazil in the coming days.
For more on all the issues affecting commodity markets from wherever you are, make sure to check out Platts LIVE at the address displayed on your screen. Thanks for kicking off your Monday with us. Have a great week ahead!