Commodity Tracker: 5 charts to watch this week

Energy policies and climate commitments are at the forefront of conversations this week with the US midterm elections taking place and the UN Climate Change Conference, or COP27, in progress.

1. Energy policy at stake in US midterm elections

What's happening? US midterm elections take place Nov. 8. The polls are expected to test whether Republicans can take control of the US House or Senate, or both, and tighten oversight of the Biden administration's energy regulations.

What's next? Republicans hope they can flip both chambers to make their case for rebalancing the US energy portfolio, with more attention on growing domestic oil and natural gas production. Democrats are looking to widen their margins in the House of Representatives and Senate to continue advancing policies in line with meeting President Joe Biden's ambitious climate goals.

Related content: US MIDTERMS 2022: Makeup of next US Congress weighs on permitting reform push

2. World awaits energy commitments, action at COP27

What's happening? The UN Climate Change Conference is now underway in Egypt, with key topics revolving around the role of gas as a transition fuel, efforts to phase out coal and decarbonizing the oil, gas and steel industries.

What's next? Concrete progress on decarbonizing energy systems will be critical to the implementation of climate plans at COP27 in Sharm el-Sheikh, the conference president's special representative Wael Aboulmagd said. Egypt's presidency of COP will focus strongly on implementation, along with finance, adaptation and loss and damage, as well as mitigation

3. Gigafactory capacity expansions in focus as electric vehicle demand grows

What's happening? Demand for batteries for electric vehicles is rising exponentially globally as the energy transition gather pace, with a number of gigafactories planned or in development, particularly in the west.

What's next? There is around 3 TWh of combined gigafactory capacity planned in Europe and the US, according to S&P Global data. It remains to be seen how many of these gigafactories will be built as planned and whether there will be enough battery capacity to meet growing EV demand by 2030.

Related content: Gigafactories head west

4. US rice market increasingly nervous as Haitian crisis deepens

What's happening? Gang violence in Haiti has reached new heights lately, with shipowners increasingly unwilling to dock in Port-au-Prince. Prices in the country's main rice supplier, the US South, are also reaching new all-time highs. These two factors are leading to a sharp reduction of demand for US rice, with buyers exploring other origins, such as Uruguay. The 52,799 mt of US milled rice committed to Haiti so far in MY 2022-23 (August-July) is 48% behind the 101,160 mt at this point in 2021-22, according to USDA data.

What's next? US suppliers hope that the situation resolves itself soon, but external intervention is seemingly the only option and this is, so far, not forthcoming. "'Concerned' might be too strong of a word," said one supplier. "Aware, yes, and if this is ongoing and doesn't resolve in the next 6 months, then yes, I'll be very concerned."

5. Reduced US polyethylene production helps push R-HDPE bale prices higher

What's happening? Bale prices for US natural-color post-consumer HDPE bales have risen by nearly 50% in less than two months, bucking the seasonal trend. On the other hand, prices of US virgin HDPE resin for blowmolding had fallen by 40% in early November from their peak in early May, according to data from Platts, part of S&P Global. The downtrend discouraged domestic production. One major buyer of R-HDPE is said to be bidding aggressively, and sellers said there is little post-consumer resin to be found.

What's next? In prime resin, US producers Dow and LyondellBasell have announced they will maintain cuts in polyethylene operating rates of 15% and 25%, respectively, through the end of 2022, amid unfavorable margins and waning demand. Shell is starting up its new 1.6 million mt/year PE facility in Monaca, Pennsylvania, and is expected to be online by early 2023. Baystar's new 625,000 mt/year HDPE unit in Texas is also expected to come online by end-2022. In R-HDPE, year-end inventory de-stocking could limit purchases and help stabilize prices until early 2023.

Reporting by Jacqueline Holman, Peter Storey, Charlotte James, and Antoinette Smith.