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Watch: Market Movers, May 29-Jun 2: Relief expected in oversupplied oil markets, Japan starts aluminum contract talks, sugar prices seen rising

Some relief to the oversupplied market is expected after OPEC and non-OPEC producers decided to extend supply cuts by nine months. How will this affect Asian refiners' long-term contracts with OPEC suppliers? In petrochemicals, what's causing the rise in paraxylene prices? And in thermal coal, how is China's pending decision on its thermal coal import policy affecting the markets? Associate editor Mia Corazon Aureus looks at this and other factors that could drive commodity markets this week.

Related event: LNG & Natural Gas Markets Asia Conference

Join our conversations on Twitter - use #PlattsMarketMovers and connect with us.

View Full Transcript

Video Transcript

Welcome to Platts Market Movers, your three-minute look at what the week ahead holds for the Asian commodity markets.

In this week's highlights, A key benchmark price expected in the met coal market, Japan starts Q3 aluminum contract talks, and sugar prices seen set to rise further.

But first, in oil, some relief to the oversupplied market is expected after OPEC and non-OPEC producers decided last week to extend supply cuts by nine months until next March.

The focus is now how refiners in buying regions like Asia will position themselves. Will it affect their long-term contracts with OPEC suppliers, or let US and other non-OPEC suppliers push more spot sales? That’s one to watch out for.

Trade in Asia’s biggest oil market, China, is expected to be slow early this week due to public holidays until Tuesday.

In coal, the market is waiting for Beijing to signal this week whether it intends to tighten its policy on thermal coal imports.Uncertainty about the move has been keeping a lid on demand for cargoes from Australia and Indonesia for several weeks.

Pressure is also mounting on iron ore prices, despite positive steel margins, due to oversupply and Chinese mills turning to cheaper scrap as an alternative.

Asia is keenly watching two contract negotiations this week.

The Asia Pacific met coal market is expecting a settlement in the Q2 benchmark price for Northeast Asia, and Japan has started its Q3 aluminum contract negotiations with Russian producer Rusal.

In petchems, Japan's largest refiner has nominated its June Asia Contract Price for paraxylene at forty dollars higher than its nomination for May. No major settlement was reached for May.

Market market sources said the rise may be due to the scheduled shutdown of a major aromatics plant in Southeast Asia from mid-June, which will trim demand for the feedstock.

In LNG, Chevron’s Gorgon Train 2 in Australia is expected to restart this week after month-long maintenance. The return of supply could put pressure on spot prices during the pre-summer weak demand period.

LNG industry leaders are due to convene at the Platts LNG and Natural Gas Markets Asia Conference Thursday to discuss issues like increasing spot liquidity and the looming supply glut.

Meanwhile, sugar prices are seen set to increase this week. Cash premiums for Thailand’s very high polarization grade are likely to rise further as traders try to get cargoes moving to Kenya before a tax-free window closes in August.

In shipping, Panamax and Supramax rates in the Asia Pacific are likely to remain low this week, while the Capesize market might see an increase in cargo volumes in June.

That’s the market in a nutshell this week. Send us your views on Twitter with #PlattsMarketMovers.

Thanks for kicking off your Monday with us and have a great week ahead.