Malaysian crude premiums seen set to come under pressure and contract talks begin for thermal coal and aluminum. Kenneth Foo looks at these and otherfactors that could move the energy and commodity markets this week.
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This week, Malaysian crude premiums under pressure, and contract talks begin for thermal coal and aluminum
First, in oil, the sweet crude market in Southeast Asia is set to be active this week after the release of the April loading program for Malaysia's light sweet Kimanis crude last week.
The recent downturn in Asia's middle distillate product margins is expected to put some pressure on Malaysian crude premiums, while tighter supply could provide support.
Also, keep any eye out later Monday for the release of China’s oil import/export data for January, which will show who the country's top crude suppliers are.
In thermal coal, Japanese power companies are expected to present their first offers in term talks for Australian thermal coal supply this week. The talks are for one-year contracts for loadings starting in April.
Japanese-specification coal is currently trading at a 12-month high at close to $110/mt FOB Newcastle, $25/mt higher than when last April's contracts were signed.
In aluminum, Japan’s second quarter aluminum premium contract talks have just kicked off, with Rusal offering at $135/mt CIF, up 31% from Q1.
More producers are expected to release offers this week, and with Japan's spot premiums hitting a 10-month high last week, they are also expected to be higher.
In petrochemicals, the styrene monomer market will see clearer market direction emerge this week on the impact of China's antidumping duties on imports from South Korea, Taiwan and the US. The duties ranging from 5% to 10.7% were imposed February 13, just before the Lunar New Year holiday.
In LNG, the possible return of Chinese buyers to the market this week could support LNG prices in Asia amid persistent issues at Malaysia's Bintulu and Indonesia's Bontang LNG projects.
After being absent for 2 weeks, will Chinese buyers return in full force to restock LNG?
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In agriculture, industrial grade B ethanol prices look set to be supported this week by a lack of supply from Pakistan and lower Australian wheat production.
Its price is estimated to be around the $600/cu m for Q2 delivery, then ease in Q3 when offers from Brazil start coming in from March.
And finally, in shipping, Panamax and Supramax rates are expected to tick higher this week on increased cargo demand from China. While congestion in the Pacific is constraining the supply of Supramaxes, Panamaxes are being drained out of the region, ballasting towards the Atlantic.
Thanks for kicking off your Monday with us and have a great week ahead.