The highlights in Asia this week with S&P Global Platts Editor Fred Wang:
** Oil demand recovery in focus at #PlattsAPPEC as oil consumption drops in Asia
** Corn market eyes China's demand after typhoons hit crops in key Chinese regions
** Seaborne coal traders watch for further easing in China's import restrictions
** Steel and iron ore markets await the release of China's key economic and investment growth data for price direction
** Dry bulk sentiment remains bearish on sluggish movement of grain cargoes from US Gulf Coast and South America
All eyes on #PlattsAPPEC as key stakeholders tackle oil demand recovery roadmap
The highlights in Asia this week: Platts APPEC conversations keep oil markets abuzz, thermal coal traders eye further easing in Chinese import quotas, and bearish sentiments grip the dry bulk shipping sector.
But first, the roadmap for oil demand recovery is in focus at the 36th Asia Pacific Petroleum Virtual Conference organized by S&P Global Platts. The conference is taking place at a time of plummeting oil consumption in Asia. The coronavirus pandemic had exposed weaknesses in regional refineries, and a slew of fuel producers have been constantly reviewing their 2020 operation plans in the face of falling margins and fast filling onshore storage.
Now, dire economic forecasts in Asia signal more demand destruction for a range of transportation and power generation fuels in coming months. Chinese refineries are optimizing their resources to secure overseas orders and expand their scale of product exports, as they have been grappling with high oil product inventories due to dismal domestic fuel consumption. Tepid crude imports by Japan, South Korea and India could also raise alarm bells among major Persian Gulf producers, as many Asian refiners determined to keep their run rates low as fuel demand recovery remains fragile across the region.
Other highlights at Platts APPEC this year include insights from OPEC Secretary General Mohammed Barkindo as the market looks for cues on the effectiveness of the OPEC+ production cut framework at a time when global oil demand remains sluggish. The conference also features CEOs of Vitol, Indian Oil Corp and other leading companies. Industry thought leaders lay out their strategies that might aid the oil market's recovery and share their views on the future of oil at a time when markets are witnessing a strategic shift as the world prepares for energy transition.
So for our social media question this week: When do you expect world oil demand to return to pre-pandemic levels? Share your thoughts on our various social media platforms with the hashtag PlattsMM.
In agriculture, markets will keep a close eye on the pace of China's corn purchases after a typhoon flattened corn crops in key regions, leading to supply tightness. China's auctions from state reserves are getting sold out, while domestic prices remain at multi-year high. China has been on a corn buying spree recently with most of the focus on US purchases. CFR corn prices into North East Asia have also risen to pre-COVID levels on the back of emerging strong demand from China.
On to thermal coal, seaborne traders are keeping a close tab on any further relaxations in China's import restrictions. Shenzhen and Xiamen customs opened up 3 million metric tons of thermal coal import quotas last week. Eased restrictions are expected to support FOB Kalimantan prices, amid surging Qinhuangdao coal prices and domestic supply constraints. Chinese domestic coal prices were expected to inch up amid winter restocking ahead of an upcoming Daqin railway maintenance.
In metals, market participants will be eagerly watching China's macroeconomic data, as well as August house price figures, and fixed asset investment growth in property and infrastructure. China's steel market has surged in Q3 on expectations of further government stimulus. But domestic prices cooled last week on the basis that prices had run up too high, if the end-user growth numbers for August are softer than expected, it could dent sentiment and result in weaker steel and iron ore prices this week.
And finally, on what moves these commodities around, in dry bulk shipping iron ore loadings on east coast of India are expected to pick up amid visible weather improvement. The overall sentiment in Asia-Pacific Panamax and Supramax markets is still quite bearish as grain cargoes from the US Gulf and east coast South America have been sluggish. Judging from the limited ballasters to the region, our dry bulk team expects the market's underperformance to continue.
Thanks for kicking off your Monday with us. Stay safe and have a great week ahead!