Commodity Tracker: 5 charts to watch this week

1. LNG buyers shape 2025 strategy amid expectations of tighter supply

What's happening? Market expectations of higher 2025 spot LNG prices are influencing buyers' strategies amid anticipated tight conditions due to supply risks and rising demand. Traders note that spot prices in 2025 are susceptible to supply shocks and delays in LNG liquefaction capacity, maintaining a tight global balance.

What's next? European inventory levels at winter's end will influence LNG competition between Europe and Asia. A harsh winter and the Russia-Ukraine transit agreement's expiration could deplete inventories, heightening competition and raising spot prices. Additionally, new demand hubs could emerge in early 2025, with Egypt possibly seeking 15-20 LNG cargoes and Brazil around 15.

2. China cancels export incentives for metals, biofuel feedstocks

What's happening? China has announced plans to cancel export tax incentives for key commodities, including metals and biofuel feedstocks, reversing measures that have kept prices competitive on the global market and fanning fears around a renewed US-China trade war. Starting Dec. 1, exports of products including semi-finished aluminum, copper and biofuel feedstocks will no longer be eligible for a 13% VAT rebate, forcing producers to recalibrate margins or direct supplies locally. Tax relief will also be reduced from 13% to 9% for some refined oil products, photovoltaics, batteries and non-metallic mineral products.

What's next? The European biofuels market, which recently imported around 60% of its waste UCO feedstock from China, faces a significant upside risk at a time when producers are already struggling to keep operations profitable. Analysts say the measures could be intended as a show of force by China to improve its bargaining power with trade partners under a new Trump presidency, but a stronger pivot to a more protectionist policy stance carries substantial inflation risk to global markets after decades of access to cheap Chinese supplies.

3. ACCUs touch assessment high amid dim future supply outlook

What's happening? The Platts assessment for both Generic and Human-Induced Regeneration Australian carbon credit unit prices jumped(opens in a new tab) to an over one-and-a-half-year high on strong demand amid dampened ACCU supply outlook plaguing the market, according to data from S&P Global Commodity Insights, before credits potentially become more expensive when volumes become scarce due to the HIR method having expired in September 2023, while the EP method retired in September. Additionally, Clean Energy updated Oct. 25 that several methods will also expire by the end of March 2025.

What's next? With demand soon to outstrip supply, developers said that it is unsurprising that ACCU prices have been rising rapidly as it would only take a few market participants to realize that they are short of their obligations for prices to increase accordingly. Some market sources were positive that prices would break past the A$45-50/mtCO2e range going into 2025, while others had more conservative estimates.

4. Japan's ENEOS aims for flexible spot crude procurement

What's happening? Japan's ENEOS Holdings is actively increasing its procurement of spot crude oil, including Canadian crude, due to a high spot ratio in its sourcing strategy. ENEOS has imported Canadian crude for the first time since 2019, alongside significant increases in US crude imports. This shift has reduced Japan's dependency on Middle Eastern crude to its lowest level in eight months. The start of the Trans Mountain expansion pipeline has improved the economics for Asian buyers to procure Canadian heavy crude, making it more viable for Japanese as well as other North Asian refiners.

What's next? Moving forward, ENEOS will continue to assess the economic feasibility of refining Canadian crude, particularly considering the logistical challenges associated with its heavy characteristics. The company will remain open to sourcing various crude types, including those from the US and South America, while monitoring market conditions and price differentials for Canadian heavy crudes. The logistical costs associated with winter transportation of Canadian crude will also be a factor in future procurement decisions.

5. Asian corn market sees price dip followed by renewed buying interest

What's happening? Asian corn prices fell in October, with Platts CFR Northeast Asia assessment hitting a low of $236/mt Oct. 21, influenced by the arrival of competitively priced US-origin cargoes from the latest harvest. The price decline led South Korean buyers to procure about 10 cargoes for January delivery through both private and open tender deals, having previously skipped December shipments. The renewed buying interest, combined with front-loading by Mexican and Japanese buyers in prior months, contributed to a slight recovery in prices to $242/mt CFR by the end of October. Nevertheless, the overall assessment reflected a month-on-month decrease of $5/mt and a year-on-year drop of $13.75/mt.

What's next? Market dynamics are expected to evolve, with potential fluctuations in prices as buyers adapt to changing global supply conditions. Sustained demand from major importing countries could further influence corn price movements in the near future.

Reporting and analysis by Cindy Yeo, Aly Blakeway, Si Han Long, Kelly Norways, Aliana Zulaika Yeong, Takeo Kumagai, Philip Vahn and Edward Low.