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Watch: Market Movers Asia, June 21-25: China’s carbon emission trading scheme set to kick-off

On this week's Platts Market Movers Asia with Senior Analyst Oceana Zhou: China's national carbon emission trading scheme is set to become operational at the end of June. The scheme will give rise to the world's biggest carbon market, with nearly 4 billion tons of carbon allowances.

More highlights in Asia's commodity markets:

*Asian refiners find Brent-linked crude complex expensive

*Southeast Asia may cut oil product output, imports

*Beijing to release commodities reserve

*Asian LNG prices ease

View Full Transcript

This week: Asian refiners to limit Brent-linked oil purchase, China's copper price likely to fall, and Asian LNG prices hit a ceiling.

But first, China's nationwide carbon emission trading scheme is expected to start trading by the end of June. It will likely be the world's biggest carbon market, with nearly 4 billion tons of carbon allowances. China's carbon market will first cover the power sector and include more than two thousand power plants in the first batch of ETS participants. It will eventually be rolled out to a total of eight energy intensive industries.

Moving to oil, South Korean refiners could stop Forties crude purchases in the second half of 2021 -- they no longer find the Brent-linked North Sea crude attractive. Refiners in Vietnam, Thailand and Indonesia are also poised to cut the share of their crude imports from West Africa and the Mediterranean. They might increase Middle Eastern and US crude intake.

The Brent-Dubai Exchange of Futures for Swaps spread -- a key indicator of Brent's premium to the Middle Eastern benchmark -- is hovering near three-year highs. This has made various crude grades produced in the North Sea, Africa and the Mediterranean less economical than Dubai-linked grades.

Staying with oil, Southeast Asian refiners are under pressure to cut or limit their oil products output and middle distillate imports due to a tepid transportation fuel demand recovery outlook. As you can see in this graph, Vietnam is expected to limit gasoline imports due to lukewarm domestic consumption. The slow progress of the vaccination program there and in Thailand, Indonesia, and the Philippines will likely continue to hurt the countries' tourism sectors.

Gasoline and jet fuel demand may not improve much from last year. Southeast Asia could be one of the last regions to open up borders for quarantine-free traveling, considering the slow vaccination progress.

In metals, Chinese government is going to release state reserve including copper, aluminum, and zinc to domestic market. It's expected to boost domestic supplies and cool down market price.

Copper futures have fallen by almost 10% from the peak on May 28 to around 9 thousand 200 dollars per metric ton on June 18. Lower flat price can help to lift domestic metals demand, but market is still digesting the news of stocks release.

Do you think the copper price will fall further amid increased supply? Share your thoughts on Twitter with the hashtag PlattsMM.

Last but not the least, in LNG, Asian spot prices for August delivery have hit a ceiling and eased below the 12 dollar per MMBtu level after rising for several consecutive weeks. LNG prices had been on a tear driven by strong demand from China as well as a spattering of supply outages and terminal maintenance. Platts Analytics said JKM over 12 dollar will pull in more and more Atlantic basin cargoes into Asia. It will also help weaken the LNG price spread between Europe and Asia.

For more on 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.