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Market Movers Europe: Oil demand recovery and sustainability goals to drive commodity markets in 2021

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Watch: Market Movers Europe: Oil demand recovery and sustainability goals to drive commodity markets in 2021

In this week's Market Movers, we will be taking a look ahead to 2021 and some of the themes S&P Global Platts sees driving commodity markets in Europe, the Middle East and Africa.

* Oil fundamentals: Middle classes to remain under pressure

* OPEC under pressure: Will the alliance with Russia last?

* Net zero targets: Carbon markets and regulation in focus

* Plastics cleans up: New taxes and ESG rules inbound

* Metals eye recovery: Demand for steel in Europe tied to stimulus

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In this week's Market Movers, we will be taking a look ahead to 2021 and some of the themes S&P Global Platts sees driving commodity markets in Europe, the Middle East and Africa.

First off, oil fundamentals. Demand will rebound by more than 6 million b/d in 2021, but consumption is still expected to be more than 2 million b/d below 2019's 101.9 million b/d, according to S&P Global Platts Analytics. The reason? The global middle class, the real engine of oil demand, faces continued pressures from wealth inequality and the ongoing COVID-19 cloud, according to Chris Midgley, Global Head of S&P Global Platts Analytics.

2021 offers no respite for OPEC+ producers, which were forced into historic output cuts by the spread of the pandemic.

The new year will see the group of major oil producers hold a crucial meeting on Jan. 4. Acting as the world's collective swing producer, the alliance has typically set production levels for at least six months at a time. But members have followed a more active approach during the pandemic to respond to rapidly changing market conditions.

Eyes will be on international policy makers in 2021, with postponed global talks around climate change due to finally take place in Glasgow in November. Before then, a new Democrat administration in the US led by President-elect Joe Biden is expected to immediately recommit the world's largest economy to the Paris Agreement signed in 2015 by almost 200 countries to control greenhouse gas emissions to limit global warming to 2 degrees Celsius by 2100. This comes as S&P Global Platts launches a new benchmark for carbon credit prices. The assessment, reflecting the CORSIA-eligible carbon credit market and to be called Platts CEC, will begin publishing on January 4.

And that takes us to our social media question for the week: Could 2021 be a turning point for sustainability regulation in Europe and globally? Tweet us your thoughts using the hashtag #PlattsMM.

The new year will see a plastics tax introduced in Europe, with each EU member state set to make contributions to the bloc's budget based on the amount of non-recycled plastic packaging used. It will be up to each member state to decide whether it comes out of a national budget, or if they impose a direct tax on companies within their own country. Market participants expect surging demand for recycled plastics in response, already in the fourth quarter of 2020, recycled high-density polyethylene pellet prices have risen 10% as sellers across Europe report a shortage of high-specification R-HDPE suitable for consumer packaging applications from the new year.

Metals markets in Europe ended the year on a roll, as strong expected demand from infrastructure spending and stimulus supported the demand outlook. This optimism looks set to continue into 2021 as the region's governments rebuild their economies and target growth. Prices for steel, used mainly in the construction and automotive industries, jumped in recent weeks on market tightness, reaching multi-year highs mid-December. On the non-ferrous side, copper, often considered a barometer of economic health, reached a seven-year high, pushed up on demand for charging infrastructure for electric vehicles and parts for wind turbines in a "green" recovery.

For more on all the issues affecting commodity markets from wherever you are, make sure to check out Platts LIVE at the address displayed on your screen.

That's it for Market Movers Europe for 2020, thanks for tuning in with us this year, and we look forward to you joining us again in the new one.