All eyes are on the Middle East, is the standoff against Qatar set to continue for much longer? What changes are we seeing in the Middle East crude market so far? What is the impact on the shipping market from this crisis? OPEC compliance – what is the latest report going to show? On metals, how have steel margins performed? What’s the story on the strike that has hit Australia’s thermal coal market? Associate Editor for Oil Eesha Muneeb explores these topics and others that may impact Asia’s commodity markets this week.
Join our conversations on Twitter - use #PlattsMarketMovers and connect with us.
Welcome to Platts Market Movers for a quick look at what the week ahead holds for the Asian commodity markets.
Our highlights: A game-changing power play in the Middle East, coal strikes in Australia and the possible revival of a sugar trading route in Asia, to kick off a happening week!
First, oil markets have had a full week now to absorb the ongoing diplomatic impasse in the Middle East, which has pushed Qatar into isolation. But, many details on vessel co-loadings, port calls and bunkering in the Middle East are still up in the air – stay tuned with our spotlight coverage on the issue as more details emerge.
This diplomatic crisis will have an immediate knock on effect on the shipping industry, as traders will start exploring options for loading other Middle East crude cargoes. It will be a similar story on clean tankers, since the Middle East-to-North Asia route is one of the world’s busiest for naphtha flows. This could result in increased demand for LR1s and MRs instead of LR2s, as cargoes get split for one-port loading rather than the co-loadings which are the norm for this region.
For oil, this week will also see the first round of monthly oil reports, after the latest OPEC and non-OPEC meeting on May 25. These reports will be a way for you to gauge producers’ commitments to their production cut agreement, which was extended for another 9 months at the May 25 meeting. The latest Platts survey shows that OPEC’s crude output in May rose by 270,000 b/d to 32.12 million b/d. This was partially driven by sharp output recoveries in Libya and Nigeria - both of these countries are exempt from the agreement. However, our calculations show that compliance is at 117% for the 11 members with quotas under the deal.
Moving on to metals, China releases its May crude steel output figures on June 14. With March and April production hitting record highs and steelmaking margins supported in May, all eyes are on whether a fresh record high will be reached this time as well.
Over in the thermal coal industry, market watchers are looking out for after-effects of strikes that broke out late last week at five Glencore mine sites in the Hunter Valley coal field, in eastern Australia. Around 900 workers took action despite an increased offer in wages. Glencore is the largest shipper of thermal coal from Newcastle Port in Australia. Buyers are wary of any potential delays to the cargoes as a result of these strikes.
Meanwhile, in agricultural commodities, demand for refined sugar from Myanmar might finally be picking up again after weeks of inactivity, so, traders are keeping a keen eye on new deal opportunities.
Do you think the Qatar crisis will be short-lived, or is it set to worsen and cause further chaos in the shipping and oil and gas markets?
Or will the Glencore coal strikes be resolved without much ado?
We’d like to hear from you – give us your thoughts via Twitter with the hashtag PlattsMarketMovers.
Thanks for kicking off your Monday with us and have a great week ahead!