In this week's highlights: COP26 ends with final deal on international carbon markets, Europe's gas markets remain on edge, the ADIPEC oil conference gets underway in Abu Dhabi, and scrap metal markets wait for an update to regulations that could have a huge impact on trade flows.
- COP26 ends with final deal on international carbon markets (00:12)
- Gas market has eye on Belarus amid transit threat (00:53)
- Oil's focus on ADIPEC, IEA monthly oil report (01:57)
- EC to release updated scrap metal regulations (02:59)
In this week's highlights: Europe's gas markets remain on edge, the ADIPEC oil conference gets underway in Abu Dhabi, and scrap metal markets wait for an update to regulations that could have a huge impact on trade flows.
With a final agreement reached Nov. 13 at the COP26 climate talks in Glasgow, the work now begins on assessing the immediate impact on voluntary carbon markets. Prices for a number of the credit types have been rising strongly this year, and raced up over the last two weeks, in anticipation of a deal on the Paris rulebook. Negotiators agreed on rules that will prevent double counting of emissions reduction credits, as well as limits on the eligibility of pre-2013 credits from the UN's Clean Development Mechanism. Taken together, these elements of the deal avoid a potential carbon credit price collapse, while clarity on the rules is likely to boost confidence in the market.
Turning to European gas now, where the increased tensions between Europe and Belarus have added a new dimension to an already anxious market.
The mood remains jittery after President Lukashenko last week hinted that he could block the transit of Russian gas to Europe if the EU imposes new sanctions against Minsk over the migrant crisis at the Polish border.
A new round of sanctions was reported last week to be close to being revealed, with markets keeping a close eye out for fresh announcements.
Russia has given reassurances it will continue to fulfil its contractual gas supply obligations to European buyers, and it seems unlikely that Belarus would be able to follow through on its threat, not least because Gazprom owns the country's gas transmission pipelines.
But the added uncertainty is sure to keep the market on its toes with gas prices remaining very high and especially volatile.
And that brings us to our social media question of the week: Do you think a pipeline crisis might favour the approval of Nord Stream 2? Tweet us your thoughts using the hashtag #PlattsMM
In oil, the focus this week is firmly on the Middle East and the ADIPEC conference in Abu Dhabi, attended by energy ministers from across the region, including Saudi Energy Minister Prince Abdulaziz bin Salman, as well as OPEC Secretary General Mohammad Barkindo, and the heads of upstream, refining and trading companies including BP, Occidental Petroleum, Eni, Lukoil and Vitol.
Dominating the conference will be the near-term recovery from the pandemic and the outcomes of the COP26 climate conference.
The longer-term ambitions of some of the Middle Eastern nations, which aim to diversify their energy offerings but also to develop their oil and gas production despite climate change pressures, will also be a hot topic. We'll be bringing you coverage from the event.
As for the near term, the International Energy Agency publishes its monthly oil market report on Tuesday, after OPEC downgraded its demand recovery forecast in its own monthly report.
It's a volatile picture with many moving parts given the scale of COVID-19 disruption. The pandemic itself continues to pose challenges, with outbreaks in China reducing aviation demand there.
And finally, the European Commission is to announce its updated European Waste Shipment Regulation – which could potentially affect trade in ferrous and non-ferrous scrap metal – on Wednesday.
Mills, smelters and traders are apprehensive that a revised regulation could distort markets by curbing regional exports of both ferrous and non-ferrous scrap to ensure availability of local supplies of materials considered key in the metals industry's decarbonization process. Scrap-based steel and metals production typically uses a fraction of the energy used in production using virgin materials.
Any blanket export scrap ban, particularly for ferrous scrap, is considered highly unlikely, due to the high volumes of ferrous scrap generated within the EU, particularly in heavy melting scrap, which can't be fully absorbed by the domestic EU market.
According to Brussels-based Bureau of International Recycling, the EU's ferrous scrap exports in first half of this year soared to nearly 50 percent, maintaining the EU's position as the world's top steel scrap exporter.
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Thanks for kicking off your Monday with us and have a great week ahead.