Commodity Tracker: 6 charts to watch this week

The Paris Olympics are not the only reason to keep an eye on France this week; the country is on track to exceed nuclear output expectations for July. S&P Global Commodity Insights editors are also examining the potential impact of the EU's plans to impose antidumping duties on Chinese biodiesel imports, as well as the bloc's coal demand amid weak industrial activity. Canadian natural gas exports to the US, Indian steel imports and Asian paraxylene prices are also in focus.

1. French nuclear output seen in upper range of forecast after July exceeds expectations

What's happening? Europe's biggest power generator EDF sees 2024 French nuclear output in the upper range of its 315 TWh-345 TWh forecast after reactor availability improved significantly compared to 2022 and 2023, the utility said July 26. Analysts at S&P Global Commodity Insights in June lifted their forecast to 342 TWh, while the July output is on track to exceed the monthly output forecast, boosting year-to-date output for the first seven months to 205 TWh. Improved nuclear lifted French power exports to record highs despite transmission capacity restrictions on its eastern borders during the spring.

What's next? A developing heat wave(opens in a new tab) this week could impact output at some of EDF's river-based reactors. EDF already warned about restrictions at its Golfech nuclear power plant in southwest France. Focus is also on the "imminent" start of France's new 1.6-GW Flamanville-3 reactor and months of test production before full operations are planned to start this winter. EDF does not yet include output from the new reactor in its full year estimate range. A key focus for the next few months will be the new border transmission restrictions(opens in a new tab) that may hinder nuclear production. French power for August delivery fell 25% since grid operator RTE warned about the restrictions on July 24, exchange data show.

2. EU moves to protect domestic biodiesel market from surging imports

What's happening? The EU announced July 19 long-awaited plans to introduce provisional antidumping duties of up to 36.4%(opens in a new tab) on imports of Chinese biodiesel imports, responding to allegations that rising imports at "artificially low prices" had seriously harmed the bloc's own growing renewables sector. China exported around 2.1 million mt of FAME/renewable diesel in 2023, according to S&P Global Commodity Insights data, with sources estimating around 90% of the supply directed to Europe. Challenged by cheap imports, suppliers have announced plans to pause investment in European biofuel operations. Neste, Europe's largest producer, reported its deepest quarterly losses in over a decade in the second quarter.

What's next? The EU is expected to formalize its provisional antidumping duties Aug. 16, with definitive measures expected to follow in February 2025. Stakeholders hope that the move will provide investment certainty to producers in Europe at a pivotal moment for building out its production capacity to meet Fit for 55 targets. Some lobbyists have called for further intervention, however, expressing concerns lingering about alleged fraudulent waste-based feedstock sourced from China for European domestic biodiesel production. For China, the move creates a more challenging market environment, prompting efforts to scale domestic biodiesel demand growth to reduce its export reliance.

3. Low Canadian natural gas prices lifting exports to US

What's happening? Net flows of natural gas from Canada to the US are on the rise as high storage inventories continue to weigh heavily on cash and forward prices in Western Canada. Exports have averaged around 5.7 Bcf/d since April 1, around 700 MMcf/d higher year over year, according to Commodity Insights data.

What's next? With forward markets pricing AECO-C in Alberta at less than $1/MMBtu for the rest of the summer, strong flows to the US are likely to continue. The imports have dampened the effect of production cuts in the US, which is also dealing with a large storage surplus. The Canadian market is expected to tighten in 2025 with the commissioning of the 14 million mt/year LNG Canada project.

4. EU's coal demand declines further amid weak industrial activity, higher renewables capacity

What's happening? The International Energy Agency estimated EU's coal demand to fall below 300 million mt by 2025 as countries within the bloc continue to phase out coal-powered plants in the face of increasing adaption of renewable sources and nuclear. The region's weak industrial activity and stagnating growth in power demand are also playing a crucial role in lower coal dependence.

What's next? The weakening of coal demand is also reflected in the sharp year-on-year drop in imports as Europe's share in global coal trade continues to falter. Turkey is expected to surpass the region's demand this year. After the volatility witnessed in the coal trade in recent years, the European-delivered thermal coal prices in the physical and financial markets have been stable.

5. Indian mills expected to brace for higher steel imports in July

What's happening? India's steel imports are expected to surge to a seven-year high in July, to reach 1.6 million mt, driven by increased inflows from China. China has overtaken South Korea as the leading steel exporter to India, comprising 43% of the South Asian country's total steel imports during January to July. India, however, is facing challenges in both its domestic market and the export sector, with its domestic prices falling from Rupees 52,800/mt in July 1 to Rupees 50,200/mt July 26.

What's next? Domestic steel mills are requesting government support such as safeguard measures against imports from China and Vietnam. With lackluster domestic demand during the monsoon season and a decline in exports due to a retreat of demand from EU during the summer, domestic steel prices continue to be a concern for Indian mills amid increasingly more competitive seaborne offers.

Related content: Trade Review: Asian steel, scrap prices to see limited support in Q3 as tepid demand, export challenges weigh

6. Asia paraxylene prices tumble on supply pressure

What's happening? Asian paraxylene prices sank to a year-to-date low of $993/mt CFR Taiwan/China July 30 as spot supply continued to rise while regional demand struggled to keep up. PX values were last seen lower Dec. 19, 2023, according to Platts data, when prices were assessed at $991.50/mt. Platts is part of Commodity Insights. Buying interest in Asia continues to stutter amid growing worries surrounding China's persistently delayed economic recovery and a sluggish downstream polyester market. Recent supply disruptions in Asia also failed to provide any major upside to spot PX prices.

What's next? With the highly anticipated pull of PX into the gasoline blend pool ahead of the US summer driving season fizzling out, hopes for any turnaround in spot prices remains bleak. Furthermore, downstream activity in China during the second half of 2024 shows limited capacity given weak domestic demand. With the downstream markets looking slow, the impact will be felt on upstream PX prices as well with sharper drop in values expected.

Reporting and analysis by Andreas Franke, Kelly Norways, Killian Staines, Vaibhav Chakraborty, Shuocheng Ni, Pankaj Rao