Commodity Tracker: 6 charts to watch this week

As US oil production rises, OPEC+ is grappling with the complexities of maintaining production cuts. Meanwhile, European solar capture prices are declining, and the EU's gas price cap has ended. Indian rice prices and the recovery of South African coal exports are also in focus this week.

1. Soaring US oil output could complicate OPEC+ plans to ease output cuts

What's happening? US oil output is set to grow further in 2025, which could put downward pressure on prices and make it harder for OPEC+ to ease some of its voluntary crude production cuts in the second quarter. OPEC+ is keeping 5.8 million b/d of crude off the market, including 2.2 million b/d of voluntary cuts. US President Donald Trump's aggressive trade policy is also causing market volatility. He has introduced tariffs on key oil market players Canada, Mexico and China, while calling on Saudi Arabia and OPEC to increase crude oil production.

What's next? OPEC+ will continue to monitor market conditions, including production outside the bloc. It expects output by rival producers to grow by 1.1 million b/d year over year in 2025, maintaining the same level in 2026. The US and other producers in the Americas are expected to lead this growth. The Joint Ministerial Monitoring Committee, which oversees the OPEC+ production agreement and is co-chaired by Saudi Arabia and Russia, is scheduled to meet April 5. Additionally, a full OPEC+ ministerial meeting is set for May 28.

2. Solar capture prices set to deflate further in Europe

What's happening? Weakening capture prices for solar and wind across Europe's main power markets have deflated 2024 market values of green electricity, with Spain and Germany most impacted, according to S&P Global Commodity Insights data. Volume-weighted average capture prices for solar in Spain fell 40% year over year to Eur45.56/MWh while German solar fell 31% to Eur54.64/MWh, according to Platts, part of Commodity Insights. Capture ratios also deflated, with German solar only capturing 69% of the wholesale power price in 2024.

What's next? Further solar photovoltaic capacity gains -- with EU27 solar capacity set to reach 400 GW later this year and potentially 500 GW by late 2027 -- will add pressure on solar capture prices outside winter. Commodity Insights analysts recently expanded their monthly capture ratio forecasts to 2027 seeing "greater erosion of value of solar capture ratios in solar-heavy markets." In Germany, capture rates are forecast to plunge to just 5% in May 2027, according to a monthly report by Commodity Insights.

3. EU gas price cap mechanism expires

What's happening? The EU's gas market correction mechanism -- which came into effect in February 2023 -- expired on Feb. 1, removing the Eur180/MWh price cap put in place to limit European wholesale gas price spikes. The expiry of the mechanism comes as European gas prices trade at 15-month highs, with the Dutch TTF month-ahead price assessed by Platts at Eur53.06/MWh on Jan. 31.

What's next? The controversial mechanism -- which was adopted by the EU after prices soared to record highs in the summer of 2022 -- was never triggered as prices fell. It remains to be seen whether the EC could consider any other legislative arrangement to limit gas price spikes. An EC spokesperson said last month the Commission would soon be presenting an action plan for affordable energy prices.

4. Indian and West African rice prices hit new low

What's happening? Indian PB 5% rice prices dropped to an 18-month low on Jan. 31, assessed at $429/mt FOB, due to weakened overseas demand and oversupply in West African markets. Platts also reported Parboiled 5% STX at $496/mt CFR Cotonou on Jan. 30. Importers in Ivory Coast and Togo are facing oversupply issues, with numerous vessels arriving but few buyers. This situation is attributed to significant exports from India, with many shipments ordered when prices were low.

What's next? India's rice supply is high, with 29 million mt in the central pool as of Jan. 1, surpassing the buffer norm of 7.6 million mt. The government allocated 2.4 million mt for ethanol production, intensifying price pressure. Indian exporters have lowered PB 5% offers by $10/mt week on week. Local milled rice prices fell to Rupees 35,000/mt ($404/mt), reflecting bearish market sentiments. Despite challenges, India is projected to export 21.5 million mt of rice in 2024-25, a 49.3% increase year over year. This could enhance competitiveness as prices stabilize.

5. South African coal exports rebound

What's happening? Coal exports from South Africa's Richards Bay Coal Terminal increased to 52.1 million mt in 2024, up from 47.2 million mt in 2023, marking the first rise in nearly a decade. This growth is fueled by infrastructure upgrades and strong demand from Asia, particularly India, which imported an estimated 29.5 million mt in 2024. The price-sensitive Asian market drove FOB Richards Bay coal prices to an average of $88.40/mt in 2024. Transnet's turnaround strategy, including improved rail capacity and security, has been a key factor in this recovery.

What's next? RBCT projects coal exports to reach 55 million mt at a budgeted rate and 60 million mt at a contracted rate in 2025. However, challenges such as locomotive availability, network reliability, and cable theft remain. Transnet aims to enhance export capabilities by modernizing infrastructure and increasing efficiency.

6. SAF spot prices fall below HVO in ARA

What's happening? Sustainable aviation fuel prices in the ARA hub have dropped sharply due to limited spot demand and logistical issues, despite the upcoming ReFuelEU Aviation mandates requiring a 2% SAF blend starting Jan.1, equating to 1 million mt of demand. Many players stored SAF at the end of December 2024, covering Q1 and Q2 needs, while much of the mandated demand is secured through long-term agreements, resulting in thin spot markets.

What's next? Buying interest is currently only seen in Q3 due to the summer blending season, but limited storage and blending facilities may impact this trend.

Reporting and analysis by Rosemary Griffin, Andreas Franke, Stuart Elliot, Nanditha Kinavoor Madathil, Namarita Kathait, Vaibhav Chakraborty and Daniel Workman.