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27 Mar 2025
07 Feb 2023 | 11:48 UTC — Insight Blog
Featuring S&P Global Commodity Insights
Renewables take the center stage this week, focusing on China and US capacity additions. S&P Global Commodity Insights editors are also monitoring US steel mills' offer prices, nature-based carbon credits, as well as US wheat exports.
What's happening? In recent years, China accounted for roughly one-third of global renewables capacity and more than 70% of Asia's. In 2022, China's renewables capacity(opens in a new tab) (solar, wind and hydro) grew around 145 GW or 14% year on year, while its thermal power generation (including coal and gas) grew by around 35 GW or 2.7% on the year.
What's next? China will add approximately 45-50 GW of coal-fired generation capacity, and around 200 GW of renewables capacity in 2023, S&P Global Commodity Insights projected. China's solar capacity growth is likely to reach close to 100 GW this year, which will be the largest solar capacity added in a single year, according to China Electricity Council. Last year's drought made China re-evaluate the role of hydropower. Plans have been made to accelerate solar and wind capacity expansions to reduce the coastal cities' reliance on hydropower exports from southwest China and dilute disruption risks.
What's happening? US utility-scale solar capacity has been rising rapidly since 2010, with the exception of 2022 when solar additions declined by 23% year on year due to supply-chain disruptions and other pandemic-related challenges, according to the US Energy Information Administration.
What's next? The EIA expects solar-powered generation to account for more than half of the 54.5 GW of new utility-scale electric generating capacity(opens in a new tab) expected across the US in 2023. Most of the new solar capacity will be in Texas, where 7.7 GW is expected to come online, followed by California with 4.2 GW, the EIA said.
What's happening? North American steel mills continue to raise base offer prices for flat-rolled steel such as hot-rolled coil, cold-rolled coil and coated coil products. The trend began last November when domestic HRC prices bottomed out at a 2022 year-to-date low of $620/st, according to Platts assessments from S&P Global Commodity Insights. In the most recent round of announcements, at least five steelmakers issued $50/st price increases(opens in a new tab) in the first days of February.
What's next? The US HRC assessment(opens in a new tab) has rebounded to nearly $800/st in early February with support from the mill-enforced price increases. In their respective announcements, some steelmakers said they were targeting minimum base prices of $850/st and $875/st. Industry observers will now monitor whether the higher offers will gain traction in the market and lend further support to rising steel prices, or whether buyers will resist the price hikes.
What's happening? The voluntary carbon market has seen a significant decline in nature-based carbon credit prices(opens in a new tab) following recent media reports casting doubts on the efficacy of existing REDD+ projects. REDD+ projects reduce emissions and generate carbon credits from preventing deforestation and forest degradation. The media reports challenged whether these projects truly prevent deforestation to the stated extent and brought about concerns over the integrity of respective carbon credits. Platts assessed nature-based carbon credit or CNC price at $2/mtCO2e Feb. 6, dropping by 35% after media reports published their investigation.
What's next? Market confidence has to be restored for demand to pick up. Carbon credit buyers are expected to request more supporting documents in future trades to verify carbon products' quality and understand whether the earnings from carbon trading is of proper use. Market participants projected a shift in market interests from emission avoidance projects, like REDD+ projects, to emission removal projects, such as afforestation and tech-based carbon capture and storage projects. Despite higher prices, the removal credits are regarded as carbon credits of better quality and fewer risks.
What's happening? The latest World Agricultural Supply and Demand Estimate report in January showed that US wheat exports(opens in a new tab) in MY 2022-23 are seen at 21.1 million mt, the lowest since MY 1971-72 when exports were at 16.3 million mt. As of Jan. 26, the US has exported 16.2 million mt, down over 6% year on year, data from the US Department of Agriculture showed.
What's next? The US is projected as the fourth-largest exporter in MY 2022-23, with a lower-than-average share of global shipments at 10%. With a decline in US wheat exports, cheaper wheat supply from key competitors and major exporters like Russia, Canada and Australia are commanding larger market share.
Reporting by Ivy Yin, Nick Lazzaro, Kassia Micek, Sampad Nandy, Shikha Singh
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