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Market Movers

Market Movers, Mar 20-25: Potential changes in China's oil, gas sector; OPEC, non-OPEC oil output cut compliance

With Daisy Tseng

March 20, 2017 09:30:37 EST (2:57)

Will OPEC and non-OPEC producers extend their agreed production cut beyond six months? How will the recent National People's Congress in China affect the country's oil and gas sector? And what will be the impact of additional liquefaction capacities on LNG markets? Editor Daisy Tseng looks at this and other factors that could drive commodity markets this week.

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Video Transcript

Welcome to Platts Market Movers, your three-minute look at what the week ahead holds for Asian commodity markets.

This week’s highlights: reform plans in China's oil and gas sector, the start-up of three new gas liquefaction trains, and a slowdown in Thailand’s sugarcane crush.

But first in petrochemicals, an arbitrage has opened for Chinese polypropylene exports into Southeast Asia and India following a price decline in the domestic China market. Chinese domestic prompt prices have fallen close to 10% over the past two months. This arbitrage was last open in the first quarter of 2016. Traders believe the volume of exports will become more pronounced in the coming weeks.

Still in China, the government is likely to release its reform plan for the oil and gas sector this week after the end of the National People’s Congress last week. The plan is expected to further open up China's oil and gas markets. Plans could include allowing independent and foreign companies to invest in the upstream sector.

Oil production cut compliance to see some clarity

More in oil, a monitoring meeting for the OPEC/Non-OPEC crude oil production cuts will be held this weekend in Kuwait, where comments around compliance levels are likely to emerge. With oil prices refusing to budge, pressure is building on the producer group to extend the cuts beyond the six-month period that was originally agreed.

So our big question this week is: Do you think OPEC/non-OPEC producers will extend their agreed production cut beyond six months?

Asia Aframax vessels to see delays until April

Moving on to shipping, Asia Aframax freight rates in the dirty tanker market were expected to remain firm this week due to strong demand and congestion in Singapore. Ship owners said Aframax vessels that have arrived to discharge fuel oil in the region were expected to see delays until early April.

Re-melt back in focus for Thai sugar

In sugar, the pace of Thailand’s cane crush has slowed down since early March. Given the high premiums that white sugar commands over raw sugar, attention will now increasingly switch to the re-melt program.

Three liquefaction trains to add 11 million mt/year capacity

Finally in LNG, market participants are looking for updates on three liquefaction trains that are expected to produce first LNG this month -- Chevron’s third train at the Gorgon project in Western Australia, Petronas’ first floating train offshore Sarawak in Malaysia, and the Sabine Pass train three on the US Gulf coast.

Send us your views on what impact the extra capacity will have on the oversupplied Asian LNG market. Tweet us with the hashtag PlattsMarketMovers.

Thank you for kicking off your Monday with us and have a great week ahead.

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