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Watch: China threatens 25% retaliatory tariff on US LNG; key routes raise hopes for Capesize vessel owners

Singapore — The US-China trade war continues to escalate. On Friday, China said it may impose a 25% tariff on US LNG if President Donald Trump follows through on his threat to escalate the trade dispute with Beijing that he initiated.

In oil, China is expected to release its preliminary import and export data for July on Wednesday. Exports hit a six-month low in June and are expected to be steady or lower in July due to limited quota availability.

Still in oil, crude oil traders await the release of Jakarta's official selling prices after a revision to the Indonesian Crude Price formula from July. Under the new formula, the gross product worth of crude grades, or their prices based on product yields, will now be taken into account.

In shipping, vessel owners are optimistic on the back of rising rates for key routes for Capesize ships. Brazil and South Africa to China iron ore routes have posted multi-year highs, which are expected to continue this week with strong demand from the Atlantic market.

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This week: markets watch for China's oil data, rates on key routes for Capesize ships seen high and bearish signals emerge in coal markets.

But first, China said it may impose a 25% tariff on US LNG if President Donald Trump follows through on his threat to escalate the trade dispute with Beijing that he initiated. Cheniere Energy holds the only major firm long-term sales agreements so far between a US exporter and a Chinese buyer. More commercial deals with China will be needed to finance projects under development. Tariffs could make those contracts more expensive. And this could prompt Chinese buyers to seek supplies from elsewhere.

So for our social media question this week: Do you think China will indeed impose a 25% tariff on US LNG? Share your thoughts on Twitter with the hashtag PlattsMM.

In oil, China is expected to release its preliminary import and export data for July on Wednesday. Exports hit a six-month low in June and are expected to be steady or lower in July due to limited quota availability.

China's crude imports meanwhile registered the first year-on-year drop for the year in June as independent refiners cut purchasing amid thin refining margins. However Platts trade flow tracker cFlow shows seaborne arrivals alone could rebound 11% on month in July.

Still in oil, crude oil traders await the release of Jakarta's official selling prices after a revision to the Indonesian Crude Price formula from July. Under the new formula, the gross product worth of crude grades, or their prices based on product yields, will now be taken into account.

Indonesia had set the ICP for benchmark Minas grade lifted in June at 70 dollars and 73 cents per barrel, equivalent to Platts June Dated Brent at minus 3 dollars and 6 cents a barrel.

In shipping, rising rates for key routes for Capesize ships are raising hopes for owners. Brazil and South Africa to China iron ore routes have posted multi-year highs, which are expected to continue this week on the back of strong demand from the Atlantic market. Brazil is hoping to load record shipments to make up for the rainy Q1 -- and looks on track to do so.

Brazil's outflow has pushed up Tubarao to Qingdao Capesize rates to the highest since November 2014. Leftover cargoes with prompt dates will certainly do no harm to the shipowners' cause. The Saldanha Bay to Qingdao route was assessed just 40 cents/wmt shy of the four-year high. And owners are optimistic that gains will continue this week.

In coal, bearish signals are back, and market participants are expecting a downward correction will begin soon for Newcastle grades. Demand for Newcastle 6,000 NAR coal, popular in Japan for power generation, starts to fade once high summer temperatures pass, while demand for Newcastle 5,500 NAR coal, which mainly goes to China, is weak as import restrictions have resulted in long queues of vessels and delays at Chinese ports.

That's it for this week. Thanks for kicking off your Monday with us and have a great week ahead!