Commodity Tracker: 4 charts to watch this week

Falling LNG spot prices in Asia, rising investments in clean technology, Japonica rice supply and the resumption of Australian coal imports to China take the center stage in this week's Commodity Tracker.

1. Flood of clean tech investments expected for 2023

What's happening? A remarkable amount of money is expected to pour into the clean tech sector this year as governments unleash clean energy subsidies and legacy energy companies begin deploying capital stockpiled during the high energy prices of 2022. Free cash flows among North American oil and gas companies jumped by more than 600% between 2020 and 2022. And the US Inflation Reduction Act has prompted corporates to deploy increasing sums of money to clean tech activity in 2022 – from $12.6 billion in September to $122.4 billion in November.

What's next? These sums are being absorbed into the clean tech sector to fund both mature technologies, like solar, wind and battery storage, and nascent technologies, like green hydrogen and carbon capture. What remains to be seen, however, is which technology will see the biggest boost.

2. Asia's spot LNG appetite to rise after JKM drops below $15/MMBtu

What's happening? Falling spot LNG prices are rekindling Asian demand, spurring interest in buying tenders and trading during the S&P Global Commodity Insights Platts Market on Close assessment process. India's GSPC recently awarded a buy tender for delivery in H2 March. Indian Oil issued a buy tender seeking a March 9 DES Dahej cargo. In February, Bangladesh awarded a spot LNG tender to TotalEnergies. China's CNOOC was heard to have awarded an initial tranche of LNG buy tender for 10 cargoes while still being in talks for buying 20 more. Renewed trading interest was also reflected during Platts MOC, where Vitol participated in a bid Feb. 14 and 15.

What's next? Additional buying interest might emerge from other Asian buyers if spot LNG prices slide further, after the Platts JKM dipped below the $15/MMBtu mark at $14.449/MMBtu Feb. 17. But sources noted that a supply overhang and comfortable inventory levels will likely continue to weigh on prices.

Related podcast: Have LNG and gas markets returned to normality in 2023?

3. Japonica rice supply likely to remain tight in 2023

What's happening? Northern Hemisphere Japonica rice harvests in late 2022 were generally disappointing. The Californian crop was the smallest in over half a century, with European production also dropping markedly – with both regions affected by severe drought conditions. Going into 2023, this has led to prices spiking, with the Platts assessments of both US #1, 4% broken white rice and Italian Arborio 5% broken white rice hitting all-time highs in recent weeks.

What's next? Harvesting of annual crops in the Southern Hemisphere is steadily building pace. Drought is likely to impact small Japonica rice-producing countries in South America and flooding in New South Wales in late 2022 is likely to lead to a sharp reduction in Australian Japonica output. Hopes remain that annual Northern Hemisphere harvests could recover later in the year, but based on recent experiences, no one is assuming anything.

4. Australian coal shipments to China seen limited in the near-term

What's happening? Australia has shipped its first metallurgical coal to China since Beijing imposed an unofficial ban on Australian coal imports in late-2020. Chinese steel miner Baosteel lifted 72,000 mt of Australian coking coal after the Magic Eclipse vessel arrived Feb. 10 at the Zhanjiang Port, in South China, data from Platts cFlow ship and commodity tracking software from S&P Global showed. China's downstream sector, however, is opting for domestic coal due to higher prices of imported coal, according to Alphalog Freight System.

What's next? At least seven ships are expected to arrive at Chinese port over the next few weeks, mostly transporting thermal coal, according to analysts at investment consultancy Xinhu Futures. But uncertainty around customs policy in China has already resulted in re-routing of thermal coal cargoes to other destinations, analysts said. They said China's met coal trade flow from Australia is not expected to see a significant change in the near-term due to limited arrivals.

Reporting by Brandon Mulder, Surabhi Sahu, Michelle Kim, Peter Storey, Rohan Somwanshi