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Commodity Tracker: 4 charts to watch this week

This week, eyes are on the volumes of Russian crude and oil products moving via dark ship-to-ship transfer, Europe’s growing LNG infrastructure, China’s steel exports outlook and Pakistan’s wheat imports.

1. Russia oil in dark STS on the rise as Western sanctions bite
What’s happening? Russia has turned to shadowy tanker operations to sidestep an EU embargo and the G7’s price caps on its oil exports. At least 47 million barrels of Russian crude and oil products were transferred by tankers that turned off their location transponders in April-June, versus 15 million barrels in the first quarter, an analysis of S&P Global Market Intelligence and Commodity Insights data suggests. The development came as the number of dark ship-to-ship transfer increased by 48% in Russia’s Exclusive Economic Zone. Observers said Russia has strong incentives to disguise trade patterns so the West cannot design effective sanctions regimes.

What’s next? The attention will be on whether more Russian oil can flow into the world market via opaque transfers at sea to boost Moscow’s war chest. Incentives are likely to be strong as Russian oil shipments are under scrutiny, with spot prices for the country’s key Urals export crude grade trading above the G7’s $60/b price cap since July 11. Disguising Russian oil as cargo of other origins could make commercial transactions much easier, sanctions analysts said.

2. Germany eyes further LNG infrastructure expansion, but opposition mounts
What’s happening? Germany — which until the end of 2022 had no LNG import infrastructure — plans to bring the number of floating storage regasification units operating across its northern coast to six over the upcoming winter, but mounting opposition to plans for a 13.5 Bcm/year two-FSRU terminal at the port of Mukran on the island of Rugen could yet derail Berlin’s much vaunted ambition to significantly raise LNG imports. Currently, three FSRUs import LNG into Germany at Wilhelmshaven, Lubmin and Brunsbuttel. So far in 2023, the three sites have sent out some 4.2 Bcm of regasified LNG into the grid, with sendout peaking at 27 million cu m/d in late May, data from S&P Global showed.

What’s next? Three more FSRUs are planned — a state-backed FSRU at Mukran, a site that will also host the privately-operated FSRU currently deployed at Lubmin, a second FSRU at Wilhelmshaven, and one at Stade. German economy minister Robert Habeck has urged regional authorities to approve the Mukran site, saying Germany’s energy security this winter would be at risk should the site be delayed. Opponents argue that a proper environmental impact assessment be carried out, with environmentalist groups concerned about the impact on tourism on Rugen that the LNG terminal could have.

3. China’s steel exports on track to hit 7-year high
What’s happening? China’s annual finished steel exports have not breached the 80 million mt mark since 2016. Annual exports have been less than 70 million mt since 2018 despite strong domestic steel production.
What’s next? With tepid domestic demand, China’s finished steel exports are on track to reach a seven-year high in 2023, analysts at S&P Global said. S&P Global analysts expect finished steel exports to rise 21% on year to almost 81 million mt. Flat steel will account for 51.5 million mt and longs 9.2 million mt of the full year total, with other products at 20.2 million mt, according to S&P Global analysts.

4. Pakistan seeks Russian, Romanian wheat in hopes to ease domestic prices

What’s happening? Pakistan’s domestic wheat prices have touched historic highs after last year’s flooding damaged the country’s crops. Over the past year, wheat price in the domestic market rose from Pakistan Rupees 60/kg to Rupees 130/kg, while wheat flour price has gone up from Rupees 85/kg to Rupees 170/kg, according to a commodity dealer source. Prices have recently come off with Pakistan’s import plan in place, which includes the arrival of grains from Russia and Romania.

What’s next? Private buyers in Pakistan are expecting the first batch of imports from Russia and Romania to start arriving on Sept. 15, according to Muzzamil Chapal, chairman of Cereal Association of Pakistan. The arrival of the cargoes is expected to further cool down domestic wheat and flour prices, according to market sources.

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