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Market Movers Asia, Nov 23-27: Winter oil and gas demand, world-first rice derivatives launch in focus

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Смотреть видео: Market Movers Asia, Nov 23-27: Winter oil and gas demand, world-first rice derivatives launch in focus

The highlights this week on S&P Global Platts Market Movers Asia with Agriculture Editor Takmila Shahid:

** Heating demand could boost Japan's crude throughput

** COVID-19 spike in Japan could impact gas demand

** Unplanned outages boost ethylene to new high

** CME launches world-first rice derivatives contract based on S&P Global Platts price assessments

Смотреть полную стенограмму

Market Movers Asia, Nov 23-27: Winter oil and gas demand, world-first rice derivatives launch in focus

This week: all eyes are on winter buying activities for countries in Northeast Asia, the impact of a spike in coronavirus cases on gas demand in Japan, and launch of the world's first PRA-based rice derivative contract.

But first, in oil, Japan's crude oil imports are expected to hit a seven-month high in November. Local refiners have boosted their crude procurement from the Middle East in preparation for a rise in heating demand over the winter. S&P Global Platts Analytics forecasts Japanese refiners to process 2.5 million b/d of crude oil on average in November, 2.65 million b/d in December and 2.8 million b/d in January 2021.

In LNG, markets are also focused on the winter demand outlook in North Asia, as well as the recent surge in COVID-19 cases in Japan that could impact gas demand. Last week, Tokyo raised its COVID-19 alert to the highest level which could lead to tighter restrictions on gatherings, although the government has not imposed any major restrictions on the movement of people yet and remains wary of its economic impact. Meanwhile, a colder weather outlook from the La Nina phenomenon for Japan and South Korea in December has boosted spot LNG price sentiment in Asia.

In petrochemicals, a sharp upswing in Asian ethylene prices from supply tightness amid unplanned plant outages pushed the key CFR Northeast Asia marker to a 15-month high, S&P Global Platts data showed. Going forward, market participants expect further increases to take place, especially as concerns over supply in the northeast Asian region persist in H1 December. Cargoes from the Middle East and the US arriving in late December may help to alleviate some of the supply tightness, but those cargoes are likely to arrive only towards the end of December or early January.

Finally in agriculture, the Asian rice market is taking a step into a new world with the launch of the world's first PRA-based rice derivatives contract. CME's new cash-settled Thai 5% broken white rice futures contract, based on the Platts assessment, is launching Monday, November 23. Its launch gives the market its first opportunity to manage risk using derivatives instruments. The Asian rice market has a lot of risks to manage at the moment, with coronavirus, climate change and geopolitics having all disrupted traditional patterns of trade in 2020. Drought in Thailand has now given way to concerns that tropical storms could damage the crop. Rice supplies are tight and trading has slowed, aggravated by current strength in the Thai Baht. Any early signs of activity in the new futures contract this week will suggest that the Thai rice market is starting to evolve to find new ways of managing this kind of risk.

In wheat, a bumper harvest is in place in Australia, following three consecutive years of drought. This has boosted its price competitiveness internationally and recently pushed prices below Black Sea and Argentinian wheat prices on CFR basis in Southeast Asia. Australian suppliers have already gained back a significant portion of market share in Southeast Asia for first quarter of next year. A massive wheat crop, estimated to be between 30-33 million mt for 2020/21 season, means these suppliers are likely to explore markets beyond Asia, and into the more traditional markets of Middle East and North Africa. Market players are also keeping a close eye on trade tensions between China and Australia, as wheat is a possible next target.

So, here's our social media poll question for the week. Going forward, will Australian wheat gain price competitiveness over Black Sea and European wheat and increasingly price into Middle East and North African wheat tenders? Share your thoughts on social media with the hashtag PlattsMM.

Thanks for kicking off your Monday with us. Stay safe and have a great week ahead!