Vegetable oil prices in the spotlight as Indonesian palm oil exports surge

This week: China’s refined copper production to rise in June, all eyes are on Indonesia’s palm oil exports after the country lowered the maximum export tax on crude palm oil, and attention turns focuses on the S&P Global Commodity Insights Bunker and Shipping Summit to be held in Singapore.

But first, in crude oil, Asian refiners are expected to continue negotiating with major Middle Eastern crude suppliers to increase third-quarter supply allocations. OPEC+ had decided earlier this month to increase crude production quotas for July and August by 50 percent compared to recent months.

But Asian refiners remain concerned that a significant part of that incremental supply from the Middle East could go to end users in Europe. Refineries have increasingly emphasized the importance of securing adequate crude and other refinery feedstocks. They are looking to maintain high run rates and maximize middle distillate production through the summer amid a rapid recovery in transportation fuel demand.

In metals, China’s refined copper output is expected to rise this month from May. Fewer foundries are undergoing maintenance and several idled capacities are expected to come back online. This is boosting domestic demand for copper concentrates, as reflected in the drop in treatment charges.

Meanwhile, China’s primary aluminum prices are expected to remain range bound as downstream demand recovers at a slow pace amid higher domestic production. Market participants expect a strong rebound in the future as COVID-19 control measures in eastern China eased after the Dragon Boat Festival holiday.

In agriculture, all eyes will be on the world’s largest supplier of vegetable oil, Indonesia. The country cut its maximum export tax and levy on crude palm oil last week to encourage exports. Jakarta is also expected to announce an additional discharge tax for sellers to export more volumes than allocated in July. Market participants expect the resumption of Indonesian palm oil exports to put a cap on Malaysian palm oil exports from the second half of June.

That brings us to our social media question for the week: Will the resumption of Indonesian palm oil supply help ease vegetable oil prices? Share your thoughts on Twitter and LinkedIn.

And finally, in the maritime sector, the focus will be on the S&P Global Bunker and Shipping Summit to be held in Singapore on June 15the and 16the. The conference will provide new insights into how the shipping industry is transforming as it attempts to reduce carbon emissions from hydrocarbon-based bunkers by using greener fuels. A full range of options will be discussed at the conference, including fuel compliance and technological challenges in the race to decarbonise the shipping industry.

Thank you for starting your Monday with us. Have a great week!

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