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Market Movers Asia

Market Movers Asia, Jan 29-Feb 2: Slew of ESPO blend cargoes expected

With Jarek Mlodziejewski

January 22, 2018 10:00:19 EST (2:51)

A cold snap in Northeast Asia has the LNG market turning bullish, Indonesian coal producers continue to grapple with loading and hauling issues, and what lies ahead forJapanese spot aluminum premiums after the7% surge last week?

Editor Jarek Mlodziejewski talks about these and other factors that could drive commodity prices this week.

Join our conversations on Twitter - use #PlattsMM and connect with us.

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Video Transcript

In this week’s highlights: the cold weather in Northeast Asia has LNG market turning bullish, Indonesian coal producers continue to grapple with loading and hauling issues; and after Japanese spot aluminum premiums gained 7% last week, what can the market expect ahead of the likely Lunar New Year slowdown?

But first, in oil, Far East Russian crude suppliers are expected to offer a slew of ESPO Blend cargoes in the Asian spot market this week.

Premiums for the medium sweet grade could extend recent gains as wide Brent/Dubai spread continues to lend support.

The Brent/Dubai Exchange of Futures for Swaps, or EFS -- a key indicator of Brent's premium to the Middle Eastern crude pricing benchmark -- averaged $3.44/b so far this month, the highest since June 2016 when it averaged $3.57/b.

So, here's what we want you to tell us via Twitter with the hansgtag PMM:

What impact do you expect the ESPO Blend cargoes will have on the Asian spot market?

In LNG, cold snaps across Northeast Asia have brought back bullish expectations of a price rebound this week, with participants noting low inventory levels to drive a wave of spring buying. But end-users say potential headwinds are coming from additional prompt supply as well as eager sellers hoping to clear away March cargoes before a steep downward correction in April prices.

Strong Chinese buying sentiment has driven prices higher again in the Asian thermal coal market. Falling temperatures have fueled more demand for coal amid limited cargo availability from Australia and Indonesia. Demand has kept prices firm even in H2 February, bucking the usual bearish trend that sets in the market following the Chinese Lunar New Year. Market participants will be keenly looking at Chinese utility tenders which have boosted positive sentiment in the market.

In metals, Japan spot aluminum premiums gained 6-7% last week, averaging at $102/mt on rising US premiums. Several aluminum tenders were heard to have closed lower, and some higher than expected by Southeast Asian end-users late last week.

In agriculture, the White sugar price dropped to a 28-month low at $351/mt last week, amid an estimated white sugar surplus of around 1 million mt. Prices were pressured lower due to bearish fundamentals -- India is expected to turn a net exporter this season from being a net importer last year, and increased exports are expected from the EU and Pakistan.

Aside from the estimated surplus, cash premiums in Asia are also adding to the downward pressure on outright prices. The cash premium for Thai 45i spot cargoes in containers was down 9% from the beginning of this year to $30/mt last week.

That’s all for now. Remember to join our conversations on Twitter with #PlattsMM. Thanks for kicking off your Monday with us and have a great week ahead!

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