US President Donald Trump and Chinese President Xi Jinping are expected to hold talks over the ongoing trade conflict between Washington and Shanghai at the G20 summit in Japan. Tensions escalate in the Gulf of Oman, especially after Trump said over the weekend that additional sanctions will be imposed on Iran. China to release petroleum and refined products trade and consumption data. Traders scout alternatives as freight costs rise. Outlook for Kalimantan thermal coal prices remain bearish. This and more from S&P Global Platts associate editor Fred Wang on Platts Market Movers Asia.
This week: We look at the potential impact of escalating tensions in the Middle East, shipping lanes safety remain in focus, ship charterers brace for cost spike, and Indonesian thermal coal prices set to remain bearish.
But first, G20 leaders are meeting in Japan, and the spotlight is on US President Donald Trump and Chinese President Xi Jinping. The two leaders are expected to hold talks over the ongoing trade conflict between Washington and Shanghai. Trade flows for a range of commodities from crude oil, LNG and petrochemicals, to agricultural products like soybeans, will hinge on the outcome of the talks. From a longer term perspective, a US-China deal is vital to global economic growth that feeds commodity demand.
While the US has threatened to impose 25 percent tariffs on 300 billion dollars worth of Chinese goods that have yet to be impacted, a more positive outcome could also emerge, such as an agreement to resume trade negotiations.
So here's the social media question for this week: Will the US and China reach consensus on trade issues? Share your thoughts with the hashtag #PlattsMM.
Still on China, the country's May trade figures are expected to be released this week. China's state planner National Development and Reform Commission will also publish refined product and natural gas consumption data that will reflect the severity of the slowdown in the Chinese economy. Many in the market expect the data will show a fall in demand for LPG and refined products.
Meanwhile, escalating tensions in the Gulf of Oman and its impact on the safety of shipping lanes will continue to be hot topics at industry events in the region this week, especially after US President Trump said over the weekend that the US would announce additional sanctions on Iran this week. Petronas will host the Asia Oil & Gas Conference in Kuala Lumpur where key speakers will include the heads of Thailand's PTTEP, Indian Oil, and commodity trading house Vitol.
The CWC LNG conference will see market players discuss the fast changing LNG market and its growth in one of the world's largest commodity trading hubs—Singapore. S&P Global Platts will be hosting a roundtable session at the CWC event, led by the experts from the pricing and analytics group, to discuss the JKM LNG benchmark.
In shipping, charterers are bracing for a tense week, with freight rates for Medium Range tankers in North Asia already on fire and seen having more upside potential. Traders are scouting for alternative sources of clean oil products to avoid additional war risk insurance costs in the Middle East. Charterers with crude oil cargoes are expected to agree to pay more to hire ships to load in the Persian Gulf. Insurers are seeking the additional war risk premium in light of the recent tanker and drone attacks in the region, and owners are passing this on to charterers.
And finally in thermal coal, all eyes will be on a coal industry conference in Bali, with market participants looking for clearer price cues after weeks of turmoil in the seaborne market. Following the lifting of force majeures at mines in South Kalimantan impacted by flooding, Indonesian supply of low-calorific value thermal coal is expected to ease. However, the near-term outlook for Kalimantan prices is expected to remain bearish as seaborne demand has been lackluster. China has also brought in new regulations for the customs clearance of import cargoes at Fuzhou port in east China, while India's seasonal monsoon has kept buying interest muted.
Thanks for kicking off your Monday with us. Have a great week ahead!