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Watch: Market Movers Asia, Oct 1-5: Wider Brent/Dubai spreads may shift Asian refiners' demand; India interest rate hike expected

The Brent/Dubai EFS last week surged to 3 dollars and 76 cents per barrel and the wider spread may lead Asian refiners to demand more Dubai-linked crude grades. Meanwhile China is celebrating its Golden Week holidays, which will mean a slowdown in commodity market activity.

In India, the central bank is expected to join Indonesia and the Philippines in monetary policy tightening to curb currency weakness which could impact oil imports.

World raw sugar futures plunged to a 10-year low last week. India's approval of 5 million mt of exports in the 2018-2019 season, is expected to add pressure to both raw and refined sugar prices.

In thermal coal, eyes will be on the Indian market, where utilities are running low on stock. The Indian demand could provide some support to the price of coal from Indonesia, which is currently oversupplied.

The shipping freight rates in the Indian Ocean are expected to continue to strengthen given demand for vessels to export grain from the east coast of South America.

View Full Transcript

This week: wider Brent-Dubai benchmark spread shifts Asian refiners to Middle East crudes, India's central bank decision on interest rate could impact oil imports, and sugar prices come under pressure.

But first, China is celebrating its Golden Week holidays, which will likely mean a slowdown in commodity market activity. Chinese traders - from oil to coal - will be largely absent from the marketplace.

However, oil markets in the rest of Asia remain active. Traders in Asia say the widening Brent-Dubai price benchmark; spread; could dampen the appetite of major Northeast Asian refiners for West African, Mediterranean, Black Sea and North Sea crude oil. Industry sources in Seoul say South Korea may consider cutting down its imports of Kazakh CPC Blend crude for Q4 due to the European price benchmark's lofty premium over the Platts Dubai marker. Demand for Far East Russian grades, including ESPO Blend, could pick up as Asian buyers rapidly shift focus back to Dubai-linked cargoes.

The Brent/Dubai EFS -- a key indicator of Brent's premium over the Middle Eastern benchmark -- surged to 3 dollars and 76 cents per barrel on September 25, the highest level since July 5.

In India, market observers speculate that the central bank will join Indonesia and the Philippines in aggressive tightening to curb currency weakness. India will unveil its monetary policy on Friday.

High international crude prices and depreciating emerging market currencies have hit Asian economies and affected their purchasing power in global oil markets.

A rate hike by the Reserve Bank of India will help stem the rupee's decline and boost the country's ability to purchase crude.

In agriculture, world raw sugar futures plunged to a 10-year low of 9.9 cents per pound last week, with India approving 5 million mt of exports along with subsidies for the 2018-2019 season.

Both raw and refined sugar prices will be under pressure.

Now, the market is still debating the mix of sugar that India will export next season and the destinations in which it can be competitive. With the mismatch between Indian sugar and world sugar prices, do you think Indian mills can still offer at competitive prices?

Send us your thoughts on Twitter with the hashtag PlattsMM.

Meanwhile, South Korean and Taiwanese corn buyers are also waiting for futures prices on the Chicago Board Of Trade to fall, before entering the market.

South Koreans will now seek to cover March arrival cargoes for the feed industry, while Taiwanese buyers are still looking to cover December shipments. The US Pacific Northwest remains the most competitive origin for corn into the Japan, South Korea and Taiwan.

In thermal coal, eyes will be on the Indian market, where utilities are running low on stock. The Indian demand could provide some support to the price of coal from Indonesia, which is currently oversupplied.

Demand from China is expected to slow down due to the week-long holiday.

In shipping, market sources expect the Asia Pacific Panamax and Supramax freight rates to move lower, again due to the holiday in China. On the other hand, rates in the Indian Ocean are expected to continue to strengthen given demand for vessels to export grain from the east coast of South America.

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