As Qatar's diplomatic crisis enters its third week, how are North Asian buyers of Qatari crude oil coping? How will the rise of US gasoline stocks affect market sentiment? And what next for LNG prices after the Europe-Asia spread hits a 5-month high? Associate Editor for Petrochemicals Karen Ng explores these topics and others that may impact Asia’s commodity markets this week.
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Welcome to Platts Market Movers, your three-minute look at what the week ahead holds for Asian Commodity Markets.
This week, we look at the impact of the Qatar crisis on crude, the rise in US gasoline stocks, and sugar prices at close to parity with ethanol.
First, in oil, buyers of Qatari crude oil, most of whom are in North Asia, will continue to look for clarity this week as Qatar's diplomatic crisis enters its third week.
The UAE made it clear last week that it would not allow ships traveling to or from Qatar to stop at its ports, even if they had stopped at other ports in between. This created confusion over fuel bunkering and co-loadings of crude oil cargoes. As a result, buyers are looking to bunker in Singapore, where bunker demand is on the rise.
So, the big question this week is, will the Qatar crisis be resolved quickly, or is the blockade likely to be protracted?
Also, watch out for weekly gasoline stocks and implied demand data from the US Energy Information Administration this week. They have become important drivers of market sentiment with the summer driving season around the corner.
Data last week showed a second straight build in gasoline stocks as demand failed to rebound.
In shipping, prompt Panamax and Supramax freight rates in the Asia Pacific will start this week on a firm note after rising last week, but this is not expected to last. Late July cargoes are being fixed at a discount to spot, implying demand will be softer going forward.
In agriculture markets, participants will be keenly watching sugar price movements this week. Prices last week fell to levels not seen since February last year, and were closing in on parity to ethanol.
In LNG, all eyes are on whether the recent prompt demand shown by South Korea and China will continue this week. If not, the recent robust supply from Australia’s Gorgon and Angola’s Angola LNG projects could start to weigh on spot prices.
The LNG price spread between Europe and North Asia was at its widest last week since January, which could trigger a fresh wave of European reloads of LNG into Asia.
In metals, some Japanese buyers and producers are moving closer to agreement in third quarter premium talks for primary aluminum imports this week.
Three buyers have agreed at 119 dollars per metric ton plus LME cash CIF Japan, while the rest are at 115-118. The Q2 premium was 128 dollars per metric ton.
In the Asia Pacific thermal coal market, participants will be looking to see if a recent rally in spot prices will continue this week after the strong return of Chinese buyers propelled Newcastle prices to a two-month high.
Rain in Indonesia is continuing to disrupt supply flows in the lead-up to a local holiday, and this is likely to support prices.
That’s the market in a nutshell this week. Send us your views on Twitter with the hashtag PlattsMarketMovers. Thanks for kicking off your Monday with us and have a great week ahead.