On this week's Platts Market Movers Asia with Senior Editor Surabhi Sahu: Asian markets await OPEC+ oil production decision ahead of the Sept. 1 virtual meeting.
More highlights in Asia's commodity markets:
*China's aluminum smelters to reduce output (01:40)
*Malaysia's palm oil supply hit by COVID-related hurdles (02:16)
*Container shortage in Asia impacts global markets (03:06)
37th Asia Pacific Petroleum Conference (APPEC 2021) | September 27-29, 2021
APPEC 2021 is Platts Asia's first hybrid event, featuring more than 100 speakers from over 20 countries, with a single platform for global delegates and exclusive sessions with top decision makers. Tune in as we shape and map the future of energy as an APPEC community.View agenda
This week, China's aluminum smelters to cut output, Asian palm oil prices to stay near record highs, and container shortage impacts markets.
But first, the global oil market is keenly waiting for the outcome of the 20th OPEC and non-OPEC Ministerial Meeting, scheduled for September 1. Investors will be looking to see if the group will review its policies to increase supply amid the global COVID-19 situation. It had previously agreed to increase output by 400,000 barrels per day each month from August
Sticking with oil, refiners across Northeast and Southeast Asia are limiting spot crude buys as they grapple with high oil inventories. This, in turn, is weighing on price differentials of multiple sweet crude grades traded in the Asian market. Far East Russian crude grades like Sokol and ESPO Blend saw their differentials tumble to 11-week lows recently. Sources have told S&P Global Platts that the downtrend is expected to continue in the near term. This comes as major customers in China and South Korea are reluctant to procure spot crude on top of their term supply intake from the Middle East, mainly due to the recent spike in stockpiles.
Moving to metals, China's aluminum market is preparing for growing production curbs. Some provinces are asking producers to trim output amid worsening power shortages in key regions. Authorities in Xinjiang, a major smelting hub in China, last week reminded smelters to employ stricter capacity and output controls by August-end. Such output curbs in China are expected to provide strong support to domestic aluminum prices in the coming months.
In agriculture, Asian palm oil spot prices are expected to stay close to the record-high level of 11 hundred dollars per metric ton as traders expect a slower output recovery in Malaysia. Pandemic-induced lockdowns in Malaysia have led to movement restrictions that are hampering production activities in the peak season. Analysts expect Malaysia's palm oil production for the month of August to edge up 8% on the month.
This brings us to our social media question for the week. Where do you see Asian palm oil prices at the end of this year? Share your thoughts on Twitter with the hashtag PlattsMM.
And finally, in shipping, container shortage in Asia is getting more severe each day, with retailers rushing to ship goods to the US and Europe to make the most of the year-end holiday season. For handicraft, minerals, stones and other raw materials, many exporters are holding back their shipments because of their inability to afford the high freight rates. Petrochemical trade in China has also been hit by restricted container availability and rising freight rates, impacting commodities like polypropylene and polyethylene.
Moving on, we are less than a month away from the 37th Platts Asia Pacific Petroleum conference.Platts APPEC, which will take place from September 27-29, will feature sessions focusing on the post-pandemic cycle, energy transition, geopolitics, and more. Read the agenda and register by visiting the address displayed on your screen.
Thanks for kicking off your Monday with us. Have a great week ahead!