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This week’s Commodity Tracker options rising grid-connected battery storage within the US, elevated demand in Europe for LNG imports, falling soybean oil premiums and constraints to world important metals provide.
1. ERCOT seen main deliberate additions to US battery storage capability in This fall
What’s taking place? The entire capability of grid-connected battery storage throughout the Continental US almost doubled yr on yr by the tip of the third quarter, climbing 97% to 9.559 GW. The California Unbiased System Operator continues to steer in battery storage capability, climbing 86.2% from a yr in the past to 4.938 GW by end-Q3.
What’s subsequent? The US is predicted so as to add roughly 1.4 GW of battery storage capability in This fall. Deliberate additions for this quarter shift to the Electrical Reliability Council of Texas, or ERCOT, with 425 MW deliberate, or 32% of the whole. Within the Western Electrical energy Coordinating Council there have been 382.5 MW deliberate for This fall, or 29% of all This fall additions, whereas within the California Unbiased System Operator there have been 382.5 MW deliberate, 29% of the whole.
2. Colder climate boosts US LNG deliveries to Europe
What’s taking place? Colder climate has been setting in throughout Europe, boosting LNG demand. In Asia, excessive fuel storage ranges amongst utilities in Japan and South Korea have been reported and consumption in China has been tempered as a result of its zero-COVID-19 coverage, which has diminished industrial exercise. Amid that backdrop, some 72% of all US LNG shipments delivered throughout November landed in Europe, in response to S&P International Commodity Insights knowledge.
What’s subsequent? Northwest Europe delivered LNG is seen at a premium to JKM, the benchmark value for spot LNG in Northeast Asia, throughout the ahead curve all through 2023, in response to market members. That implies cargoes will proceed to be incentivized to go to Europe. European fuel inventories are already edging decrease, suggesting that if winter temperatures drop sharply and for a sustained interval, that may additionally are likely to favor Europe as a vacation spot for US LNG cargoes within the near-term.
3. Latin American soybean oil premiums pressured by growing provide from Argentina
What’s taking place? Soybean oil premiums in South American markets have dropped, pressured by a change in Argentina’s international change price coverage that has led to elevated promoting. Aiming at growing central financial institution’s reserves and stimulating shipments, Buenos Aires put in impact Nov. 28 a brand new model of the “soybean greenback” program, by which exporters may liquidate their gross sales at 230 pesos/$1, or 40% above the official price. From Nov. 28-30, greater than 1 million mt of soybeans have been offered or priced in Argentina. The FOB Up River and the FOB Paranaguá foundation ranges for January loading have been assessed Dec. 1 at minus 12.50 cents/lb to Chicago Board of Commerce futures, 17 cents and 16.70 cents/lb decrease on the yr, respectively, in response to Platts knowledge.
What’s subsequent? Market members are more likely to monitor how soybean oil shipments from Argentina, the world’s largest exporter of the commodity, will carry out within the coming months, following the help supplied by the “soybean greenback” program. The product from each Argentina and Brazil will nonetheless must compete in opposition to growing sunflower oil exports from Ukraine and cheaper Asian palm oil provides.
4. International push towards net-zero emissions may lead to important steel provide constraints
What’s taking place? When evaluating how a lot aluminum, copper, and lithium provides can be found globally and the way a lot manufacturing may develop in contrast with how a lot could be wanted to get to net-zero emissions by 2050, “you in a short time see there are constraints,” Michael Widmer, commodity strategist with Financial institution of America, mentioned throughout a 2023 outlook media roundtable. Rising electrical energy costs in Europe, and to a lesser extent within the US, have pushed up working prices for metals producers. For instance, with aluminum buying and selling at $2,400/mt, smelters have working prices of greater than $8,000/mt, in response to Widmer’s presentation.
What’s subsequent? There’s a problem with scaling lithium provide as a result of in lower than 10 years, provide would want to extend by an element of 10 to fulfill anticipated demand, he mentioned. By 2027 or 2028, each single provide venture would want to return on-line on time, with the volumes promised to maintain the market out of deficit, which is feasible, however difficult, he mentioned.
Reporting and analyses by Kassia Micek, Harry Weber, Jose Roberto Gomez, Samyak Pandey, Jared Anderson
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