This week, the US-China trade talks remain in the spotlight, US President Donald Trump is expected to meet North Korean leader Kim Jong Un, LNG spot prices hit new low, and solid buying interest from China heard for Indonesian low calorific value thermal coal.
This week: US and North Korean leaders are set to meet, LNG spot prices hit new low, and solid buying interest from China heard for Indonesian low calorific value thermal coal.
But first: US President Donald Trump tweeted about a delay in adding Chinese tariffs that were scheduled to begin on March 1, but did not specify a new deadline. Trump is planning a summit in late March with Chinese President Xi Jinping in Florida, assuming both sides made additional progress. Ahead of this, China has agreed to buy up to $1.2 trillion in goods from the US as part of the current negotiations to end the trade war between the countries. Are you confident that the US will delay the deadline? And Will the US and China reach a wider consensus on the outcome of the trade talk? Share your thoughts on Twitter with the hashtag PlattsMM.
Now another big geopolitical event to watch out for in Asia is the meeting between Trump and North Korean leader Kim Jong Un in Hanoi, Vietnam, on February 27-28. This is the second time the two leaders are meeting within one year, and markets will be watching out for any firm commitment from either side, which could ease tensions and boost positive sentiment in North Asia.
In oil, Francis Fannon, assistant secretary at the US State Department's Bureau for Energy Resources, visited Japan and South Korea last week. The focus was on energy security, regional cooperation as well as the importance of energy diversification in the Indo-Pacific region. The visit comes at a time when East Asian oil consumers are calling for their 180-day sanctions waiver on Iranian oil imports to be extended beyond May 4.
Moving to metals, Australia's Fortescue Metal Group has reduced discounts for March term contracts of lower grade fines and this will increase the cost of raw materials for end-users. Market participants expect buying interest to shift from low to medium grade fines with the spread narrowing but persistently weak steel margins continue to keep demand muted.
In the Asian LNG spot market this week, buyers and sellers would be evaluating if prices have bottomed out, after the benchmark JKM hit over a 17-month low. Market participants say weak LNG prices along with the Brent/JKM slope below 10% should encourage some buying interest this week.
And finally in thermal coal, seaborne thermal coal prices are seeing an uptrend. Chinese traders have returned to the market after the Lunar New Year holidays to demand Indonesian low calorific value thermal coal. The rains in Indonesia's Kalimantan provinces have limited production and with the government imposing quota restrictions on miners who did not fulfil their domestic market obligation in 2018, sentiment has turned more bullish.
Thanks for kicking off your Monday with us. Have a great week ahead!