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Commodity Tracker: 4 charts to watch this week

OPEC remains optimistic about global consumption after reducing the estimates for oil production for its members. On the other hand, European carbon prices plunge due to recession worries and weak industrial demand. S&P Global Commodity Insights editors analyze the rise in China’s cyclamate exports to Southeast Asia and Africa.

1. OPEC trims call on crude but remains bullish on global demand

What’s happening? In the monthly market outlook, OPEC nudged down its members’ required oil production estimates, trimming the “call” on its crude by 90,000 b/d in 2024 and 110,000 b/d in 2025, compared to January’s estimates, while remaining optimistic about global consumption trends. The group has been battling to support prices amid disappointing Chinese demand, high production from non-OPEC producers, and wars in Europe and the Middle East.

What next? While OPEC+ remains determined to boost oil prices, which started 2024 on a weak footing, analysts say a row could emerge over compliance, following sweeping cuts to African quotas and a new round of voluntary roll-backs for Q1 2024. OPEC sees global demand growing by 2.25 million b/d in 2024 and 1.85 million b/d in 2025, it said in the Feb. 13 report. Meanwhile, the International Energy Agency, expects oil demand to rise by just 1.24 million b/d in 2024 and to peak by the 2030s.

2. Recession worries, weak industrial demand weigh on EU carbon

What’s happening? EU carbon permits under the country’s Emissions Trading System plunged to 28-month lows due to stunted demand driven by macroeconomic concerns, low industrial activity, and reduced power generation. Platts, part of S&P Global Commodity Insights, assessed EU Allowances (EUAs) at a 28-month low of Eur56.39/mtCO2e on Feb. 13. This time last year, EUAs rose to a record high of over Eur100/mtCO2e, but since Q4 2023, prices have been on a steep downward trend.

What’s next? Recession concerns and reduced emissions from power and industry set the scene for further weakness. Analysts at S&P Global expect 2024 average prices to plunge to Eur63.90/mtCO2e compared with Eur85.30/mtCO2e in 2023 and Eur81.50/mtCO2e in 2022. “The slowdown is broad-based affecting sectors like construction, manufacturing, and services. We expect prices to hit the high Eur50/mt mark threshold in February,” they said in a recent note. EUA supply is also expected to rise further with an announcement of REPowerEU volumes due in the coming weeks.

3. Europe-China sulfuric acid price spread expected to widen long-term

What’s happening? The spread between the average of Platts’s FOB West Europe and FOB China sulfuric acid range assessments has reached $30/mt, its highest level since early November 2022, when the difference reached $37/mt. Since mid-January, the average of sulfuric acid prices out of China has declined by $2.50/mt–about 16.7%–due to lackluster demand. Meanwhile, West Europe’s average price has climbed by $7.50/mt–roughly 21.4%–as some consumers reportedly seek acid as a substitute for liquid sulfur, which has tightened on the continent.

What’s next? The difference between sulfuric acid prices out of Asia and Europe is projected to grow in the decades through 2050 to over $70/mt when adjusted for inflation, according to S&P Global. That’s thanks to increased metals smelting in the Far East driving up supply while sustained decarbonisation efforts in Europe constrain it.

4. China’s cyclamate exports rise 2% on year as Asian, African demand rises

What’s happening? Mainland China’s exports of cyclamate rose 2% year on year in 2023 to 26,746 mt, according to data from S&P Global Market Intelligence’s Global Trade Atlas, on the back of growing demand in Southeast Asia, the Middle East, the Indian Subcontinent, and Africa due to its cost-effectiveness as an alternative to sugar. Export prices were 20% lower year on year at $2,088 per mt in December, according to data from S&P Global, due to overcapacity in the industry.

What’s next? Exports are expected to grow but at a relatively slow rate, despite higher consumption in Asia and Africa, which is predicted to have higher than average annual growth rates between 2023 and 2028. Consumption is forecasted to stagnate or even decline in other regions, including mainland China, mainly due to a shift to more intensive sweeteners. Prices will likely remain relatively stable due to overcapacity.
Source: Platts

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