Commodity Tracker: 5 charts to watch this week

The Kurdistan Regional Government and federal Iraqi authorities are discussing a deal to reimburse the semi-autonomous region with a fixed amount selling price for all crude oil produced. Meanwhile, due to lower prices, global gas demand is set to grow in 2024, according to the International Energy Agency. S&P Global Commodity Insights editors are focusing on key trends in metals.

1. Iraq's Kurdish region moves closer to resolving crude oil exports halt

What's happening? The semi-autonomous Kurdish region in Iraq's north has not been able to export crude through Turkey's Ceyhan terminal for almost a year, keeping some 450,000 barrels of crude oil from being shipped through normal channels. Turkey halted the Kurdish oil exports on March 25 at the request of the Iraqi government after an international arbitration court ruled that Turkey had violated an aspect of a 1973 pipeline agreement between the two countries by allowing Kurdish independent oil exports separate from Baghdad. Some of that production has been exported through Iraq's southern ports and used domestically.

What's next? Both federal Iraq and the Kurdistan Regional Government are in talks to decide on a fixed amount selling price for all crude oil produced by KRG, moving closer to resolving the impasse. The selling prices have been reported at $6/b to not less than $30/b. That compares with Dated Brent, the global oil benchmark, priced at $83.985/b as of Jan. 29, according to S&P Global Commodity Insights data.

2. Rise in Singapore bio-bunkers demand seen boosting regional UCOME usage

What's happening? Used cooking oil methyl ester, or UCOME, demand for Singapore B24 bio-bunkers is steadily rising, and surged 42.37% from 135,000 mt in Q3 2023 to 192,100 mt in Q4 2023, according to data from the Maritime and Port Authority of Singapore. B24 bio-bunkers contain 24% UCOME.

What's next? Many suppliers in Singapore are ramping up operations to start supplying bio-bunkers from Q1, sources said. With the EU Emissions Trading System and the Carbon Intensity Index regulations by the International Maritime Organization kicking in this year, sources said bio-bunkers could maintain prominence in Singapore as a readily available drop-in fuel.

3. Global gas demand to grow in 2024:IEA

What's happening? Global gas demand is set to grow by 2.5% year on year in 2024 to some 4.19 Tcm, the International Energy Agency said Jan. 26, with lower prices expected to contribute to a recovery in consumption. In its Q1 gas market report, the IEA said demand growth was expected to be concentrated in fast-growing markets in Asia-Pacific and gas-rich countries in Africa and the Middle East.

What's next? Despite its forecast of overall year-on-year growth in 2024, the IEA said demand growth in key markets in Asia and Europe would be capped by the limited increase in global LNG supply, which is expected to grow by only 3.5%. It also warned that its 2024 forecast came with an "unusually wide" range of uncertainty given geopolitical developments in particular.

4. US recycled, virgin HDPE price spread hits 3-year low

What's happening? The price spread between US recycled high-density polyethylene and virgin resin is at its narrowest point in nearly three years. The spread stood at 30.5 cents/lb on Jan. 25, the lowest level since Platts began assessing recycled natural HDPE pellet in June 2021. The spread peaked at 93.8 cents/lb on June 1, 2023. Recycled HDPE natural pellet prices have been in the mid-70s cents/lb FOB Chicago since mid-December 2023, according to data from Platts, part of S&P Global Commodity Insights. In contrast, virgin HDPE blow molding prices have risen by 5.5 cents/lb or 14% since late December.

What's next? Geopolitical tensions in the Red Sea have compromised Middle Eastern and Asian supply security for Europe-based buyers, making US resin more attractive and could provide support to virgin resin prices, sources said. HDPE buyers, who favored much cheaper virgin resin in 2023, could shift to recycled pellets, especially with 2025 post-consumer recycled content targets looming.

5. Copper concentrate TCs expect to continue the downtrend amid supply tightness

What's happening? Platts copper concentrate treatment charge/refining charge assessment touched 30-month low of $26.20/mt Jan. 25. The 2024 benchmark was settled at $80/mt in Q4 2023. Since the spot TC dropped below smelters' breakeven level, demand for byproduct sulfuric acid has weakened, and copper smelters are suffering from significant production loss. As fewer term contracts were settled between buyers and sellers, spot transactions also increased to an all-time high in Q4.

What's next? A production suspension at the Cobre Panama copper mine, lower production guidance of 180,000 mt-240,00 mt from Anglo American and shipments delay from Chile attributed to supply tightness in Q1. At the same time, increased copper production capacity in China is driving raw materials demand. The market expects TCs to stabilize in Q2 on reduced demand.

Further Read: Lithium prices to remain weak in Q1 on ample supply, subdued PEV outlook

Research and analysis by Claudia Carpenter, Chau Kit Boey, Stuart Elliot, Antoinette Smith, Lu Han