OPEC’s technical advisory committee will meet on Saturday ahead of a full ministerial meeting next Monday. Will the meeting provide clues on whether OPEC plans to lift the exemptions on Libya and Nigeria from its production cut agreement? What’s supporting freight rates in the Asia Pacific? And will more Black Sea wheat be coming to Southeast Asia this week? Associate editor Jade Halford explores these and other topics that may impact Asia’s commodity markets this week.
In this week’s highlights, China to release data for June, the dry bulk market set to gain strength, and OPEC to consider including two more countries in its production cut agreement.
But the big news of the week is, China is due to release a slew of data for June across a range of commodities this week. It is also due to release its closely watched GDP data later on Monday.
Its oil data for June could show a further drop in domestic crude output, while its steel data is expected to show production hit a record high above 70 million tonnes in the month.
In nonferrous metals, China’s Xinjiang aluminium smelter is expected to announce output cuts this week. Anticipation of the cut has already boosted prices, and confirmation could provide further support.
In shipping, sentiment is set to be further boosted this week by summer coal demand in China. With most Chinese-flagged vessels engaged in moving domestic coal to demand centers, rates for other vessels in the Pacific are set to rise further.
Demand to move grain cargoes in the Atlantic is also supporting Panamax freight rates.
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Now, back to the markets.
The Asian LNG market is awaiting the results of key sell tenders from Indonesia’s Tangguh and Bontang projects this week. They are offering a total of nine cargoes for delivery later in the year. These prices will provide an indication of market fundamentals for the coming winter.
In the Philippines, the government has received proposals from China, Japan, Indonesia, South Korea and Russia to co-develop an LNG hub, which it targets launching by 2018.
In petchems, the Asian monoethylene glycol market is expected to pick up in the second half of this year amid healthy downstream demand in China.
In agriculture, wheat traders will be watching to see if more Black Sea milling wheat will head to Southeast Asia this week. This comes after the Australian premium white wheat price surged to a fresh record high last week.
And finally, in oil, OPEC’s technical advisory committee will meet on Saturday ahead of a full ministerial meeting next Monday. Traders will be watching both events closely for clues on whether OPEC plans to lift the exemptions on Libya and Nigeria from its production cut agreement.
So, our big question this week is, will OPEC cap Libya and Nigeria’s production and, if so, at what levels?