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Market Movers


Market Movers, Jul 24-28: OPEC, non-OPEC oil output cut agreement under review

With Andrew Khaw

July 24, 2017 10:00:37 EST (3:27)

The monitoring committee overseeing the OPEC/non-OPEC crude production cut agreement is hosting a ministerial meeting on July 24. What will their recommendations be, considering factors such as Libya and Nigeria's output and Ecuador's withdrawal from the pact? Will the European Commission lower antidumping duties on Indonesian biodiesel arriving in Europe? And will capesize freight rates continue rising this week amid higher bunker prices and firmer iron ore markets? Editor Andrew Khaw explores these and other topics that may impact Asia’s 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 the Asian Commodity Markets.


This week, the European Commission will decide whether to lower antidumping duties on biodiesel from Indonesia, the OPEC/non-OPEC crude production cut agreement is under review, and China is set to release crude import data for the first half of the year.


But first, in shipping, Capesize freight rates rose last week, with the key Brazil to China iron ore route seeing higher tonnage demand.


However, market sources are divided over whether prices will continue to rise this week-- amid higher bunker prices, firm iron ore markets and strong steel prices -- or if it will plateau or even fall off -- as heavy tonnage supply remains a unconcern.


For VLCC, chartering for August stems has begun, but the lengthy tonnage list has already seen rates for the key Persian Gulf to Far East route fall below the Worldscale 50 mark, and this shaky sentiment is expected to continue for the week.


Clean Long Range tankers are anticipated to see some support from charterers scrambling to cover requirements in anticipation of a further increase in rates.


So, our big question this week is, will the dry bulk sector continue to see the rates push higher in the fourth quarter? Please send us your views on Twitter with #PlattsMarketMovers.


Moving to agriculture, the European Commission is due to decide this Thursday whether to lower antidumping duties on biodiesel arriving in Europe from Indonesia and Argentina. Lowering the duty could restore the flow of Indonesian biodiesel into Europe, potentially muscling aside cargoes from Malaysia. Producers in Europe may also find it difficult to compete on pricing.


And finally, in oil, the monitoring committee overseeing the OPEC/non-OPEC production cut agreement is hosting a ministerial meeting on Monday.


The committee can recommend changes to the deal. With output from Libya and Nigeria recovering in recent months, and Ecuador withdrawing from the pact, there has been widespread speculation about what the committee might do.


Saudi Arabia and Russia are said to be leaning towards maintaining the status quo, with their ministers saying it is too early to call for deeper cuts amidst peak summer demand season.


On the demand side, major crude importer China is due to release supply data for the first half of the year this week.


OPEC’s share of China's crude imports fell to 55 percent for the first five months, down from 57 percent a year ago. The half-year data is expected to show North America's share rising further, as China has become a major buyer of US crude in recent months, and even received its first cargo from the US Strategic Petroleum Reserve last week.


Thanks for starting off your Monday with us. Don't forget to send us your views on Twitter with #PlattsMarketMovers and have a brilliant week ahead!





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