Commodity Tracker: 4 charts to watch this week

1. How the ICVCM will shape the voluntary carbon market

What's happening? Three months after the Integrity Council for the Voluntary Carbon Market released its initial assessment of carbon credit methodologies for the Core Carbon Principles label, the expected market impact remains minimal. While a few credit categories have been confirmed as CCP eligible, the renewable energy category has been deemed ineligible. Consequently, demand for CCP-eligible credits has not noticeably increased compared to pre-announcement levels.

What's next? Several factors may explain this lack of market responsiveness. Many buyers are sticking to established decarbonization plans, making immediate shifts to purchasing strategies challenging. Additionally, the ICVCM's ability to distinguish between high- and low-quality credits will only be evident once a majority undergoes assessment. Lastly, external challenges, including reputational risks from flawed projects, continue to hinder participation, underscoring the complexity of the global VCM.

2. Biodiesel DAP Paulínia spot prices reach record high

What's happening? On Oct. 23, Biodiesel DAP Paulínia prices soared to their highest level since January, climbing 30% compared to the same period last year when the blending mandate was 12%. This upward momentum continued, reaching a record R$ 6,115/m³ on October 24. The previous peak occurred on Nov. 29, 2022, at R$ 6,225/m³ under a 10% mandate, now increased to 14%. On Oct. 24, the price difference between Biodiesel Spot prices and the ULSD S10 Santos Import Parity Price was R$ 2,677/m³, while Petrobras diesel prices in Paulínia remained stable.

What's next? With soybean oil prices averaging high this week, the ongoing intercrop season, and a soybean oil shortage in Mato Grosso, analysts expect fees for the sixth bimester to rise. This trend suggests that recent trades may represent some of the last at current lower fees, indicating potential shifts in the market landscape for biodiesel in 2024.

3. Tight European sulfuric acid market slams freight rates

What's happening? The prolonged squeeze in the European sulfuric acid market is impacting the regional stainless steel chemical tanker market. Vessel owners are reportedly shifting away from the region due to limited export opportunities, according to freight market sources.

What's next? Market participants anticipate that the tight conditions in the European sulfuric acid market will persist through the rest of 2024. A clearer picture of the longer-term market dynamics is expected to emerge during next month's European Sulfuric Acid Association General Assembly in Madrid. This autumn gathering serves as a crucial platform for pricing discussions and contract negotiations, which could influence future trends in both sulfuric acid and freight rates.

4. West African rice market adjusts to price drops after India ends export duty

What's happening? On Oct. 25, Platts, part of S&P Global Commodity Insights, assessed parboiled 5% STX CFR Cotonou rice at $535/mt, the lowest price in 11 months. This drop of $25 follows India's decision to lift its export duty on October 22, which also triggered a $38/mt decline in India's export market price.

What's next? West Africa, the largest importer of Indian rice, faces significant adjustments. Benin imported 1.2 million metric tons of non-Basmati rice in 2023-24, highlighting India's vital role as a supplier. Countries like Togo, Ivory Coast, and Senegal are now seeking alternatives, increasingly sourcing white rice from Thailand, Pakistan, and Vietnam. In Nigeria, the most populous nation, the government has suspended tariffs on key imports to combat a 37% food inflation rate, leading to illicit rice sourcing from Benin as local production remains low.

Reporting and analysis by Eszter Bencsik, Priscila Pinheiro, Matt Hoisch and Nanditha Kinavoor Madathil