The highlights in Asia this week with S&P Global Platts Senior Editor Nora Juma'at:
** China soybean crushes look to US for prompt bargains for November demand
** LNG stakeholders to tackle post-COVID response
** Clean tanker demand seen easing
** Capesize dry bulk rates seen making a turn after dropping last week
** Ethylene prices rise on supply concerns
** Asian coal demand remains tepid
Chinese demand drive up US soybean prices; crude oil imports seen dipping
The highlights in Asia this week: China's September crude oil imports are likely to dip, supply concerns impact ethylene prices, and clean tanker freight rates are headed for another decline.
But first, further indications of Beijing's commitment to the requirements of its trade deal with Washington emerge as China's private soybean crushers are returning to the US looking for prompt bargains to fulfill November demand. The robust Chinese demand has pushed US bean prices higher, while the number of US soybean cargoes headed to China is on the rise. Apart from soybeans, the US has also sold more corn, wheat and pork to China compared with previous seasons.
Still on China, the country's oil, crude and bitumen blend imports in the coming months are set to extend the downtrend from the third quarter, given the high crude inventories, thinning margins and quickly depleting import quotas. In August, these imports had fallen by close to 10% to 4.22 million barrels per day, from the record high 4.68 million barrels per day in July.
Meanwhile, the number of new crude oil cargoes arriving in China in September is expected to fall. This will continue to reduce China's total crude imports, which had peaked at a record high 12.99 million barrels per day in June.
This week in LNG the Gastech Virtual conference is expected to keep the market abuzz as issues such as how the industry will respond to the post-pandemic environment will be addressed.
Last week, LNG prices in Asia had stayed above the 8-month high of $4/MMBtu after Cameron LNG in the US notified off-takers of more than a week-long delay and following Australia's Gorgon LNG's announcement that maintenance at Train 2 will extend into October. Prices are likely to remain supported, especially if the Sabine Pass terminal, which is to come back online this week, faces further delays.
This brings us to our social media question: Will Asia's LNG prices stay above the 4-dollar mark this week? Share your thoughts with the hashtag PlattsMM.
Moving on, ethylene prices in Asia's petrochemical markets have gained on concerns of a supply crunch as US plants shut in the aftermath of Hurricane Laura. As a result, Asian steam crackers are likely to switch feedstocks from naphtha to liquefied petroleum gas as LPG is able to produce more ethylene.
In thermal coal, prices are expected to stay firm as buyers stock up for the coming northern hemisphere winter. But Asian demand remains weak as power plants in China and India are sufficiently stocked.
On the shipping front, clean tanker freight rates are headed for another round of declines, as planned maintenance at Middle East refineries will reduce output. The slowdown in demand is already reflected in rates, which have fallen from recent highs.
Now in dry bulk, Capesize freight rates dropped even further last week but is expected to be making a turn soon. Given iron ore's firm prices, all major shippers are expected to ship out in full swing and clear out the spot market. In the coming weeks, market participants are slightly bearish on the back of condensed Chinese coking coal demand and a possible domino effect from the waning rates of the larger sizes.
Finally, you still have the whole week to register for the thirty-fourth Asia Pacific Petroleum Conference happening from September 14 to 16. This year's conference features six sessions that will take you through a complete journey along the supply chain. Check out spglobal.com/appec to know more about the sessions and our stellar line up of speakers.
Thanks for kicking off your Monday with us. Have a great week ahead!