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Market Movers Asia Mar 22-26: China oil majors' 2020 results, 5-year plans in focus

Energy Transition

Глобальная интегрированная энергетическая модель

Смотреть видео: Market Movers Asia Mar 22-26: China oil majors' 2020 results, 5-year plans in focus

The highlights on S&P Global Platts Market Movers - Asia with LNG Associate Editor Shermaine Ang:

*5-year plans, emission control efforts of China's oil majors in focus

*First high-level meeting between US, China since Biden took over

*Bearish signals lurk in spot LNG market

*Seasonal demand drive coal prices

*Eyes on global crude steel data

Platts Atlas of Energy Transition

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This week: markets assess developments from the US-China meetings, bearish signals emerge in LNG market, and eyes are on production figures from the World Steel Organization.

But first, China's carbon neutrality plan is back in the limelight as its oil majors are scheduled to hold briefings this week. Apart from 2020 results and 2021 operational plans, market participants will be closely watching Chinese oil giants' five-year plan on green energy and carbon emission controls. These plans are expected to show how state-owned and private companies in China are working to help the country reach its carbon neutrality goal by 2060.

Meanwhile, markets will digest news from a high-level meeting between US and Chinese officials late last week. It was the first meeting between top officials from both countries – currently entangled in a trade conflict – since the Biden administration took over. Officials from Beijing and Washington traded barbs during the meeting, suggesting a limited possibility of trade tensions easing between the world's top economies any time soon. Still, market participants will assess signals from the meeting and evaluate how they will impact the flow of commodities moving forward.

In LNG, end-user demand is expected to be tepid as offers continue to emerge in the spot market.

Volatility in the European gas market has caused similar movements in the northeast Asian LNG market. Platts JKM continued to be propped up with the arbitrage window for US cargoes into Asia hovering around OVER the zero-dollar mark for a month.

Many industry participants believe that JKM was approaching its ceiling for the summer pricing period. End-users, especially Chinese buyers, would be unable to pass higher import costs down with typically lower trucked LNG and pipeline gas prices during summer.

S&P Global Platts Analytics expects the JKM to come under pressure again in the months ahead, as the price rally earlier this year already pulled a lot of destination flexible supply into the region.

For our social media question: Do you think spot LNG prices will breach the $7/MMBtu mark this week?

Still on generation fuels, demand for thermal coal in Asia is expected to see a slight uptick, on the back of summer demand as well as upcoming monsoon restocking activities. BUT, high ocean freight rates for smaller vessels like Supramaxes and Panamaxes are likely to persist. And this could impact seaborne trades.

In metals, eyes are on the World Steel Association's global crude steel production figures for February. Observers expect the numbers to show an increase despite the shorter month. Output was likely driven by Asia, which saw several new blast furnaces come online in the second half of 2020 and early 2021. But indications are emerging that manufacturing is slowing down as concerns continue to persist over the spread of coronavirus infections in the region.

And circling back to China's emission controls, 23 steelmakers in Tangshan are required to lower production starting from the weekend up to December 31.

Some sources said that China's adoption of a strong stance on emission controls and imposing steel output cuts mean that iron ore demand would weaken in the coming months. Other sources, however, are more optimistic about iron ore prices in the medium term on firmer steel prices and margins.

And finally, stay ahead of the evolution of energy at Platts LIVE, the new professional platform built exclusively for the energy industry. Have your say and join the conversation at plattslive.com.

Thanks for kicking off your Monday with us. Have a great week ahead!