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Market Movers - Asia, Sep 18-22: All eyes on China oil data's possible impact on global demand outlook

With Daisy Tseng, Editor, Agriculture

September 18, 2017 10:30:37 EST (3:00)

China is due to release its August oil product output data, and September run rates at state-owned refineries. Both sets of numbers will likely impact the global oil demand outlook for the rest of the year.

Metals market participants are keeping an eye on alumina after prices surged to multi-year highs last week. Listen to the related podcast here.

Sugar traders await a free-trade agreement to be signed between Australia and Indonesia, which could have implications of Australian sugar availability for Japan and South Korea.

Asian acrylonitrile prices will start the week at a 2.5-year high. The market says the uptick is likely to continue this week. Read the related analysis here.

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

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Video Transcript

This week’s highlights: Alumina prices at multi-year highs, acrylonitrile prices surge, and the sugar market awaits a free trade agreement.

But first, in oil, China is due to release two key reports this week, on oil product output for August, and on run rates at state-owned refineries in September. Both sets of numbers will likely impact the global oil demand outlook for the rest of the year.

This comes after the International Energy Agency raised its oil demand outlook for the year for a third month in a row, to 1.6 million barrels per day, due to strong demand in the US and Europe.

If China’s data is strong, the global oil demand outlook could be even more bullish.

Also in China, alumina prices have surged to a 9-year high on an ex-works basis, and to a 6-year high on an FOB Australia basis, amid uncertainty over how environmental policies and winter cuts will impact bauxite and alumina supply.

Market participants expect prices will rise even further this week. What do you think? Will we see a peak soon? Join our conversation on Twitter with #PlattsMM.

In Japan, talks are set to start this week for term contract prices of Australian thermal coal, for shipments starting from October to September next year. With recent trades for Japanese specification coal at $100 per tonne FOB Newcastle, sources expect last year’s contract price of close to 95 dollars could well be exceeded.

Separately, coal shippers from Australia, Indonesia and Russia will be testing import restrictions at some Chinese ports this week. There have been reports of increasing delays for vessels seeking to enter these ports due to the restrictions, leading to a rise in demurrage costs.

In the dry bulk market, Supramax and Panamax freight rates are expected to remain supported this week. Healthy demand for coal movements in the Pacific, weather delays along China's coast and demand for grains from South America, the US Gulf and the Black Sea are all providing support.

In agriculture, sugar traders this week are waiting for a free trade agreement to be signed between Australia and Indonesia, with market talk suggesting this could occur as early as October 1. The agreement would cut tariffs for Australian sugar exports to Indonesia, levelling the playing field with Thai sugar. However, this could mean there is less Australian sugar available for refineries in Japan and South Korea.

Finally in petrochemicals, Asian acrylonitrile prices will start this week at a two and a half-year high amid global supply tightness due to force majeures in the US and the shutdown of plants in China after environmental inspections. That uptick is seen likely to continue this week, with prices expected to hit a ceiling next month.

That’s all for now. Thanks for starting off your Monday with us, and have a great week ahead!

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