Commodity Tracker: 5 charts to watch this week

OPEC+ maintains its output cuts amid weak oil prices, while Brazil's automotive industry is poised for strong growth. S&P Global Commodity Insights editors focus on soybean prices in China and gas production in the Appalachian basin.

1. OPEC+ extends output cuts amid weak prices

What's happening? OPEC+ agreed Dec. 5 to delay easing its voluntary production cuts, totaling 2.2 million b/d, until April 2025. It also extended a further 3.6 million b/d of groupwide cuts until the end of 2026. The group is committed to keeping significant volumes off the market into 2025 as it faces weak demand growth forecasts and growing non-OPEC+ crude output, which are weighing on oil prices. Platts, part of S&P Global Commodity Insights, assessed Dated Brent(opens in a new tab) at $74.74/b Dec. 16. OPEC has revised its estimates for global oil demand in 2024 and 2025 multiple times this year, expecting growth of 1.82 million b/d in 2024, and 1.54 million b/d in 2025, according to its November oil market report.

What's next? In 2025, quota compliance and non-OPEC+ oil output are likely to continue challenging the group. OPEC released its latest oil market report Dec. 11, which provides insight into the group's expectations for the coming year. Geopolitics could also impact prices and OPEC+ policy. Ongoing wars in Ukraine and the Middle East pose supply security and sanctions risks, while US President-elect Donald Trump could reconfigure the US relationship with major oil producers and consumers.

2. Brazil's automotive boom set to fuel record demand

What's happening? Brazil's automotive industry is poised for its best half-year vehicle sales in 10 years, according to National Association of Automotive Vehicle Manufacturers. This could mean more fuel demand in the country in the long term, depending on the endurance of the strong results, according to analysts at Commodity Insights. The association expects 2,654,000 vehicles to be licensed in 2024, surpassing 15% of 2023's total 2,309,000 licensed units.

What's next? The impact of vehicle licensing on fuel consumption aligns with the future expectations of fuel demand growth, said Commodity Insights analyst Joao Lopes. Brazil's overall diesel demand is projected to rise by 1.9% in 2025 compared to 2024. Additionally, demand for gasoline C and hydrous ethanol demand in 2024 is expected to be the highest ever registered in the country.

3. Soybean market braces for price dip in 2025

What's happening? As of Dec. 12, the CFR China soybean flat price had fallen(opens in a new tab) 24% year-on-year to $439.91/m, according to Commodity Insights data. Brazil's soybean production is projected to hit a record 169 million mt in the marketing year 2024-25, up 10.5% year-on-year. China's supply remains stable as planting accelerates and global supply improves with favorable weather in South America.

What's next? Chinese soybean imports are anticipated to decline by 1.8% to 109 million mt in MY 2024-25, reflecting slower growth in crush demand and the impact of trade relations. With domestic crushing rates remaining low, any escalation in trade conflicts could further reduce imports to crush demand levels, currently estimated at 98 million mt. Weather conditions in South America will be crucial for future price movements.

4. Appalachian gas producers show continued restraint on output growth

What's happening? In December, output from the Marcellus and Utica shale basins averaged about 35.6 Bcf/d, down roughly 800 MMcf/d, or about 2.2%, compared with the 36.4 Bcf/d on average over the same period last December. So far this season, gas production peaked at just 35.9 Bcf/d, well below the record-high 37 Bcf/d recorded last winter, according to data from Commodity Insights.

What's next? Since at least 2018, output from the Appalachian Basin has surged in the fourth quarter, often followed by declines beginning in mid- to late December or early January. However, in 2024, output has remained below full capacity even amid rising prices and demand. Lower output levels this winter follow a tough year for Appalachia's gas producers, many of whom committed to lower production levels in response to low prices in an oversupplied US gas market.

5. Indian imported ferrous scrap hits 4-year low

What's happening? Platts' Indian imported containerized shredded scrap benchmark price assessment reached its lowest level since December 2020, closing at $374/mt CFR Nhava Sheva(opens in a new tab) Dec.4. This decline follows that in the Turkish HMS 1/2 (80:20)(opens in a new tab) scrap market, assessed at $337.50/mt CFR Dec. 4. Turkey is viewed as a bellwether for seaborne ferrous scrap trade, while a lack of domestic demand for finished steel products and excess supply of feedstock alternatives in India is contributing to weaker prices.

What's next? The price observed in the Turkish bulk import scrap market during the week of Dec. 9 suggests a limited further downtrend for shredded scrap prices in the Indian market. As of Dec. 16, Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $354.50/mt CFR, up $9/mt week on week, while Indian containerized shredded scrap at $380/mt CFR Nhava Sheva, up $5/mt week on week.

Reporting and analysis by Rosemary Griffin, Iman Rezig, J Robinson, Sayona Anna John, Isabela Rocha and Sam Faulds.