The highlights in Asia this week, with S&P Global Platts senior quality and digital editor Norazlina Jumaat: Asian refiners assess risks after a volatile week following the attacks on Saudi Arabian oil facilities. China, Japan, India and South Korea account for 83% of Saudi Arabia's crude oil exports to Asia, according to S&P Global Platts Analytics. Several state-run refiners in the region have received notices of how the attacks in Saudi would affect crude allocations.
Asia is also bracing for any development around the US-China trade talks, winter emission controls in China which could impact steel and aluminum production, and the negotiations between Australian thermal coal producers and Japanese buyers.
The highlights in Asia this week: markets brace for US-China trade talks set for early October, China's winter emissions controls in focus, and negotiations between Australian thermal coal producers and Japanese buyers continue.
But first, Asian refiners assess risks after a volatile week following the attacks on Saudi Arabian oil facilities. According to S&P Global Platts Analytics, the "Big Four” account for 83% of Saudi's crude oil exports to Asia. China has seen the highest growth in oil imports from Saudi Arabia this year. But after the attacks, several Chinese state-run refiners were notified that some of their September and October term crude supplies would be affected. Unlike Chinese buyers, end-users from India, Japan and South Korea have said that their near-term Saudi crude allocations are unaffected.
Now apart from supply concerns, Nobuo Tanaka, former head of the International Energy Agency, said that organizations like the IEA must be prepared for an escalation of military conflicts between Saudi Arabia and Iran, as well as the impact it could have on the supply of oil.
Meanwhile, markets are on the lookout for any development prior to the planned US-China trade talks in Washington next month. A Chinese delegation visited the US last week to lay the ground for a potential agreement in October. Trade tensions have thawed in the last few weeks with China allowing some US goods to be exempted from tariffs, while the US has delayed imposing some.
With the first of October marking the 70th anniversary celebrations of the People's Republic of China, analysts say Beijing will be keen to avoid an escalation.
So for our social media question this week: Do you think the October talks will result in the US and China finally agreeing to put an end to their trade dispute? Share your thoughts with the hashtag PlattsMM.
In thermal coal, negotiations for the October benchmark prices between Australian producers and their Japanese customers forge ahead in Tokyo.
Both sides are wrestling over bids and offers ranging from as low as 63 dollars per metric ton to as high as 73 dollars. In Indonesia, miners plan to cut output to support prices in Kalimantan ahead of China's long holiday, while their Indian counterparts have made a slow return to restocking post-monsoon given the slowing economy and stockpiles on the east coast.
In agriculture, Australian wheat prices remain firm as dry weather conditions in Western Australia push farmers to hold back from selling new crop.
Western Australia makes up for about 50% of the country's total wheat output. And more than 95% of the wheat Australia exports ends up in Asia and the Middle East. Australian farmers are cautious of over-selling for fear their crop may not be as big as earlier anticipated. Suppliers, on the other hand, are concerned that if they have to pay higher prices, they will be uncompetitive in the export market.
And finally, China's steel market will be poring over the latest details of the country's winter season emissions controls. This will determine how much steel and aluminum can be produced. In the past, prices have risen after such announcements on expectations of a supply shortage. But buying interest in iron ore is likely to weaken this week with China's National Day holidays just around the corner. Most mills and traders are well stocked up for the week-long holiday, which means that iron ore prices are unlikely to climb higher.
That's it for this week. Thanks for kicking off your Monday with us. Have a great week ahead!