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Market Movers

Market Movers, May 8-12: S. Korea election's impact on LNG imports, release of MidEast June OSPs, India's new steel policy

With Charlotte Rao

May 08, 2017 10:00:37 EST (2:45)

How will South Korea's LNG imports be affected after the presidential elections on May 9? How will Middle East producers set official selling prices for crude oil coming to Asia in June? And how will India's new steel policy affect potential imports and domestic prices? Editor Charlotte Rao 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 energy and commodity markets.

This week’s highlights: a look at how South Korea’s presidential elections could affect LNG imports, a new steel policy in India, and an update on Panamax and Supramax freight rates.

But first, in oil, Middle Eastern crude producers are expected to release their official selling prices in coming days after Saudi Aramco issued its last week. Aramco lowered its June OSPs for crude bound to Asia by up to seventy cents a barrel, and raised them for cargoes bound to Northwest Europe, the Mediterranean and the US.

In petrochemicals, Taiwan's Formosa Petrochemical will double its use of LPG to fifteen percent in May. This comes as its price fell to a fifty dollar discount to naphtha, the level at which Northeast Asian steam crackers typically switch feedstocks. The move will result in higher ethylene yields.

Here’s a quick look at scheduled maintenance for vinyl acetate monomer and acetic acid in Asia this month.

In shipping, Panamax and Supramax freight rates in Asia Pacific dived last week due to a lack of demand. However, market sources expect rates will regain some ground this week as fundamentals remain stable.

In addition, coal traders say the recent drop in coal prices should spur demand for ships as trade ramps up after recent holidays in the region.

Still in coal, the annual supply contract between Japanese power utilities and Australia’s Glencore is finally expected to be sealed this week. Spot activity in the Japanese market has slowed to a crawl as the talks have run six weeks over deadline.

In LNG, traders are expecting supply to hit the market this week after several cargoes in a Kogas tender in South Korea last week were not awarded. The restarts of Australia’s Gorgon Train Two and the US' Sabine Pass Train Two will also add to supply.

Meanwhile, South Korea’s LNG imports are likely to rise as all three main candidates in Tuesday’s presidential election promise to tackle air pollution. Coal-fired power generation is targeted for reduction.

In steel, a new policy in India mandates the preference for local steel in all government procurement tenders.

Meanwhile, in China, all eyes are on an upcoming conference in Beijing for official news on sintering and steel production cuts. For our big question this week: Will China curb production further, and by how much?

Share your thoughts on Twitter with #PlattsMarketMovers. Thanks for kicking off your Monday with us, and have a great week ahead.

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