Jul 19, 2021
On this week’s Platts Market Movers Asia with Editor Fred Wang: A new wave of coronavirus infections in Indonesia has dented the demand outlook for Asian gasoline. Indonesia, Southeast Asia’s largest gasoline importer, has become the epicenter of the virus in the region.
More highlights in Asia’s commodity markets:
–OPEC, allies agree to raise oil output
–China’s carbon market launch could trigger more decarbonization policies in Asia
-Japan aims to power Tokyo Olympics with 100% renewable energy
-Asian thermal coal prices bullish
-Ethylene sentiment to stay firm
This week: gasoline demand takes a backseat as COVID-19 resurges in the region, renewable energy on the spotlight at the Tokyo Olympics, and China’s carbon market launch could trigger similar measures across Asia.
But first, Asian buyers are expected to welcome news over OPEC+ agreeing to raise crude production in the coming months. The move is expected to relieve a market that analysts say has grown increasingly tight.
Meanwhile, a new wave of coronavirus infections in Indonesia has dented the demand outlook for Asian gasoline. Participants are anticipating a further decline in auto fuel imports as driving activity slows. The bearish demand expectations come as Indonesia – Southeast Asia’s biggest gasoline consumer – becomes the new COVID-19 epicenter in Asia. Movement curbs are already in place and possible extensions are looming. Middle distillate traders said cargo deferrals might happen if domestic demand worsens.
So, for our social media question this week: How do you think gasoline demand will fare amid another wave of coronavirus infection in Southeast Asia’s biggest motor fuel consumer? Share your thoughts on our various social media platforms with the hashtag PlattsMM.
The launch of China’s national carbon market last week opens the door for more policy driven measures in a region where most emissions reduction initiatives are voluntary. China has rolled out a carbon trading market in the power sector, estimated to make up 40% of the country’s carbon emissions from energy consumption. China’s carbon market will take time to develop and much higher CO2 prices will be needed for it to be effective in reducing coal consumption. Going forward, sectors such as petrochemicals, steel, nonferrous metals, and aviation are also expected to launch carbon trading by 2025.
China’s top economic planner NDRC is expected to develop a net-zero roadmap ahead of the COP26 UN climate conference in November. Against that backdrop, it remains to be seen how other developing economies commit to broader emissions reduction targets.
While on the theme of energy transition, Japan is targeting 100% renewable energy for electricity at the Tokyo Olympics starting July 23. It is buying from renewable energy sources and using a tradable green certification system.
The initiative, which would showcase Japan’s capability for a green push, also involves the use of hydrogen for the Olympic and Paralympic cauldrons and the torches. 500 fuel-cell electric vehicles would be used at the Games.
In Asian thermal coal, Indonesian thermal coal prices are expected to remain firm this week amid tight supply and strong demand. Australian high-ash coal prices are also expected to remain bullish with healthy demand from east Asia and limited South African coal supply.
The ethylene spot market sentiment could stay supported by firm US ethylene prices and tight South Korean supply. US ethylene prices rose on the week amid multiple steam cracker outages in the US. A tight supply from South Korea due to unstable steam cracker operations would also lead to higher selling ideas from producers.
Thanks for kicking off your Monday with us and have a great week ahead.