Commodity Tracker: 5 charts to watch this week

1. Thailand's I-REC market faces oversupply

What's happening? Thailand's I-REC market issued a record 1.48 TWh from January to October , yet oversupply remains due to low redemption rates of only 401.11 GWh. Biomass I-RECs led with 1.1 TWh, while solar and wind I-RECs saw increases, and hydro I-RECs dropped significantly. Demand is rising among tech firms and electric vehicle manufacturers, supported by the Feed-in Tariff program aiming to add 5 GW of renewable capacity by 2030. The Thailand-Germany climate partnership introduces a sector-coupling strategy for emissions reductions, aiming for carbon neutrality by 2050.

What's next? The FiT-driven increase in I-REC supply could stabilize prices as demand grows, particularly from tech and EV sectors committed to sustainability. Market discussions with the Ministry of Energy may prompt policy changes to manage oversupply, while Thailand's new climate goals could drive demand from sectors embracing renewable standards. The market expects rising Q4 demand for solar I-RECs, aiming for balance between issuance and redemption to strengthen Thailand's renewable positioning in Southeast Asia.

Further Reading: Risks and Restraints(opens in a new tab)

2. Drop in Turkey's wheat flour exports weighs on global wheat shipments

What's happening? The US Department of Agriculture has reduced its global wheat export forecast by 1.2 million mt to 214.67 million mt for the marketing year 2024-2025 (June-May), according to its World Agricultural Supply and Demand Estimates report released Nov. 8. Exports are seen 3% lower year over year, the USDA said, based on anticipation of reduced shipments from Turkey, the report said. Before the import ban, Turkey's Inward Processing Regime allowed mills to import wheat grain duty-free if used in producing flour for re-export, a conditional exemption to the 45% wheat import tariff.

What's next? The USDA said Turkey's wheat flour exports are expected to decline due to import restrictions from June 21 to Oct. 15. With Turkey forced to reduce its flour exports, Egypt has become a key supplier of wheat flour to markets in Africa and the Middle East. Turkey's total wheat exports for MY 2024-25 are forecast at 7.5 million mt, down 1 million mt month on month, with flour representing the bulk of this total. A decline in wheat flour exports from Turkey could push prices higher in the African and Middle Eastern countries.

3. Surge in MMA imports hits Europe, causing price drops in a sluggish market

What's happening? Market players have reported ongoing subdued demand for methyl methacrylate, a key ingredient in resins and plastics, across Europe. This decline coincides with healthy availability, as there are no significant production issues. Additionally, imports from Asia, particularly from China, have contributed to the overall market softness due to their own lackluster demand. While the European market was experiencing a lull, prices continued to fall, with some producers described as "aggressive," as the annual destocking period arrived and they tried to minimize inventories for the year-end.

What's next? Market participants expect imports of Chinese material arriving in Europe in December and January 2025, while no improvement in appetite is anticipated.

4. European polystyrene at lowest level since 2021

What's happening? European polystyrene contracts dropped to their lowest level since February 2021 on Oct. 30, reaching Eur1,540/mt FD Northwest Europe, due to easing feedstock costs. Despite a 10% year-on-year decrease in overall polymer demand, some converters noted a healthy demand for food-grade polystyrene. The rise in styrene prices earlier in 2024 was not fully reflected in polystyrene prices.

What's next? The drop in European polystyrene prices has improved competitiveness against imports that face delivery delays and do not meet food-grade standards. Competitive prices and immediate availability may boost the European polystyrene market, influencing dynamics as converters and buyers increasingly prefer local production over imported materials, ensuring timely supply and compliance.

5. Amid lower adherence to international markets, Brazil's audit court requests pricing explanations from Petrobras

What's happening? Brazil's Federal Court of Accounts, or TCU, requested that Petrobras present fuel pricing strategy(opens in a new tab) details, which the court believes to lack a formal registry, according to a Nov. 6 document. Up until 2023, the state-controlled company's prices were aligned with import parity prices. Then, a new strategy ceased a pre-defined frequency in price changes and avoided the volatility of international prices. The company's diesel, for example, hasn't moved prices since December 2023. The new change has been under surveillance by the court since Nov. 3, 2023, to ensure its lawfulness, proper execution and alignment with company goals. Petrobras has about 75% of the Brazil fuel sales market share.

What's next? TCU gave the company 120 days to complete the request and extended the surveillance period for another two years. "What for sure we are lacking is clarity, higher predictability from Petrobras," said a market participant.

Research and analysis by Fatin Shahirah Manan, Sampad Nandy, Maria-Eleni Tsimeki, Akul Gupta and Isabela Rocha