Commodity Tracker: 5 charts to watch this week

Russia's crude exports are increasing, leveraging the US-sanctioned ships. This week highlights the rise in European LNG prices due to anticipated growth, while South American rice values are experiencing a decline thanks to favorable weather conditions.

1. Russia uses US-sanctioned ships to lift crude exports

What's happening? On Jan. 10, the US Treasury sanctioned nearly 160 oil tankers in the final days of the Biden administration. However, data from S&P Global Commodities at Sea and Maritime Intelligence Risk Suite show that 15 of these tankers have loaded 12.8 million barrels of Russian crude since then. Because the ships are not using G7 services, Russia has increased its overall seaborne crude exports from 3.1- 3.2 million b/d in December 2024 to more than 3.3 million b/d in January.

What's next? The non-G7 fleet lifted 80.1% of Russia's seaborne crude exports in January. However, China and India, the top two buyers of Russian oil, are becoming more cautious as US President Donald Trump begins his second term. The amount of Russian oil on the water rose to 108 million barrels on Feb. 6, up from the pre-sanctions level of 88 million barrels. This amount could rise further if Chinese and Indian refineries hesitate to receive barrels from sanctioned ships.

2. European LNG price spreads widen amid new supply wave

What's happening? European LNG derivative price spreads have reached their widest levels, primarily due to several LNG projects expected to boost supply by 2028, mainly from the US and the Middle East. An increase in LNG supplies generally leads to greater market availability, creating a surplus that drives prices down as competition among suppliers intensifies to attract buyers, thereby suppressing future prices.

What's next? Looking ahead, market sources expect that the influx of LNG supply, particularly from US projects like Golden Pass and Plaquemines LNG, will significantly impact market dynamics by 2028. However, potential delays in project timelines could create short-term supply constraints. Additionally, the expiration of EU gas storage regulations in 2025 may lead to reduced LNG imports, affecting price stability. Market participants will closely monitor Asian demand and geopolitical factors that could influence pricing and supply availability.

3. California's LCFS credit bank hits record high as market dynamics shift

What's happening? The California Air Resources Board released Q3 2024 data for the Low Carbon Fuel Standard on Jan. 31. The credit bank hit another high, driven by renewable diesel, electricity and biomethane, but was mitigated by a rise in conventional fossil diesel. Platts, part of S&P Global Commodity Insights, assessed front-quarter LCFS credit prices on Feb. 5 at $73.50/mt, up from the January average of $72.

What's next? LCFS regulatory amendments, passed in December 2025, are waiting on approval from the Office of Administrative Law. The office has until Feb.18 to approve the amendments, and the changes will likely go into effect in April 2025. Commodity Insights expects credit prices to continue rising in both the short and long term, and the credit bank to begin falling in 2025.

4. South American rice prices drop

What's happening? The South American rice market is seeing significant price declines this harvest season due to favorable weather conditions. In Brazil, prices for parboiled and white rice have dropped sharply, with Brazilian parboiled rice assessed at $669.18/mt in January, down from $916.96/mt year on year. Similarly, Argentine and Uruguayan rice prices have also decreased, with Argentine white rice assessed at $697/mt and Uruguayan white rice at $669/mt as of Feb. 5. These declines reflect improved weather conditions following last year's El Niño-related challenges.

What's next? The outlook for the South American rice market remains cautious yet optimistic. Traders hope for a bumper crop in Brazil, despite only a small portion being harvested. In Argentina, the harvest is expected to yield better quality rice, with shipping negotiations underway for mid-February to March. However, demand from key importers like Brazil and Chile remains low due to sufficient inventories. In Uruguay, traders anticipate potential price decreases in March, followed by increases from April to June.

5. China used cooking oil export volumes rise in 2024

What's happening? China's UCO export volume reached a record high in 2024, with the US emerging as the largest importer. This surge was driven by policies such as the US Inflation Reduction Act and California's Low Carbon Fuel Standard, which provide tax credits for renewable biodiesel made from waste products. The EU followed as the second-largest buyer, with demand fueled by antidumping duties on cheaper Chinese biodiesel and the mandate for sustainable aviation fuel.

What's next? Despite UCO prices reaching a two-year high, global demand for UCO is expected to remain strong. However, uncertainty is increasing regarding China's upcoming UCO exports to the US, following the recent 10% tariffs on goods imported from China and the US Treasury Department's guidance on the 45Z clean fuel tax credit, which has rendered imported UCO ineligible for tax benefits. According to market sources, this situation is likely to significantly impact, or even reshape, the future trade flow of China's UCO exports.

Reporting and analysis by Max Lin, Clio Ho, Erin Tully, Arif Islam, Iara Lima, Desire Sigaudo and Chau Kit Boey.