Commodity Tracker: 5 charts to watch this week

This week, prices are under pressure across multiple markets, with declines in European carbon allowances and Vietnamese rice. Meanwhile, Malaysia's solar I-REC prices are also dropping amid concerns of oversupply.

1. EU carbon prices expected to continue tracking gas market

What's happening? European carbon allowances began the week of Feb. 24 lower as prices continued to follow the downward trajectory sustained over the week of Feb. 17. Wider bearish fundamentals, geopolitics, and investment fund readjustments drove the losses. Platts, part of S&P Global Commodity Insights, assessed the nearest December contract for EU Allowance at Eur73.815/mtCO2e, the lowest since Jan. 9. Meanwhile, UK allowances also fell during the week ending Feb. 21, with Platts assessing the nearest December contract at GBP40.63/mtCO2e, down 13% week on week. This decline followed a strong rally driven by news of a potential linkage of the UK Emissions Trading System with its EU counterpart.

What's next? The carbon market will likely continue to take price signals from the gas complex, which continued to decline Feb. 24 amid ongoing developments surrounding Ukraine and Russia. Market participants will await the release of weekly data from the Intercontinental Exchange, showing what positions investment funds are taking in the market.

2. Challenges in China's hydrogen electrolyzer industry

What's happening? China's hydrogen electrolyzer industry is facing significant hurdles, including slow technological progress, high costs, and limited demand both domestically and internationally. Despite China's success in clean energy manufacturing, the hydrogen sector lags, threatening its global green energy leadership. In 2024, China had a manufacturing capacity of 39 GW/year, but demand only reached 693 MW in the first 10 months. High costs and demand shortages lead to oversupply and declining electrolyzer prices, squeezing manufacturers' profits.

What's next? To overcome these challenges, China must establish robust standards aligned with international practices, focusing on emissions and defining low-carbon hydrogen. Effective policy incentives, like a higher carbon price, are needed to bridge the cost gap between green and grey hydrogen. Trade barriers from the US and EU could hinder exports, while technology transfer restrictions may impact China's proton exchange membrane electrolyzer manufacturers.

3. Netherlands renewable energy unit prices decline

What's happening? Netherlands' Hernieuwbare Brandstof Eenheden or renewable energy units prices for 2025 have been declining since early February. This trend is driven by high hydrotreated vegetable oil stocks in the Amsterdam-Rotterdam-Antwerp region, and low sustainable aviation fuel prices due to weak spot demand, as airlines are well covered for the first half. In recent weeks, airlines and HVO producers concluded large volume sales of HBE-Annex IX B tickets for the 2025 obligation year, which weighed on all HBE ticket types. Platts assessed current year HBE-Annex IX B at Eur9.5/GJ on Feb. 19, down 19.6% from Feb. 3, causing the spread with HBE-Advanced to widen. Additionally, Platts assessed renewable diesel FOB ARA and SAF CIF NWE prices down 6.6% and 10%, respectively, from the start of 2025.

What's next? HVO has a more bullish outlook for Q2 and beyond due to the seasonal increased demand for road fuels and the potential for more physical demand from Germany. Additionally, HVO derived from feedstocks listed under Annex IX, Part A of the renewable energy directive will become a more attractive means of meeting EU mandates later in the year due to the lack of a specified cap.

4. Vietnamese rice prices hit a 29-month low

What's happening? Vietnamese 5% broken white rice was assessed at $385/mt FOB on Feb. 21, marking a 29-month low and a decrease of $204/mt year over year, according to Platts. This price drop is attributed to heightened competition from countries like India and Pakistan, as well as weak demand from major buyers such as the Philippines and Indonesia. Vietnamese rice currently holds a competitive pricing edge over other regions, attracting buyer interest despite the ongoing price pressure.

What's next? As the winter/spring harvest, Vietnam's largest, peaks in March, further price declines are anticipated. The harvest is expected to produce more 5% broken white rice and Fragrant 5% rice, increasing supply. However, key buyers like the Philippines are purchasing less, and Indonesia is absent from the market, potentially leading to continued price pressure. Without a demand increase, prices may fall further. Vietnam's milled rice output for the 2024-25 marketing year is forecasted to rise slightly to 26.5 million mt, with an increased sown area but stable yields.

5. Malaysian solar I-REC prices tumble on oversupply concerns

What's happening? Malaysia's solar International Renewable Energy Certificates market has tumbled due to an anticipated increase in supply. Participants are bracing for an influx of I-RECs by the end of the first quarter. Most solar power plants are projects by state-owned utility Tenaga Nasional Berhad, including a majority of large-scale solar units. Solar I-RECs in the country are primarily produced from rooftop solar and registering these I-RECs is challenging due to their small capacity and the need for aggregation, sources said. Platts assessed prices for Malaysian current-year Solar I-RECs at $5.48/MWh Jan. 2. By Jan. 22, offers were ranging between $5.30/MWh and $5.50/MWh, with prices closing at $5.25/MWh, according to local traders. On Feb. 10, a trader noted that indicative values for Solar I-RECs vintage 2025 were less than $5/MWh. Platts assessments on the same day plummeted to $4.79/MWh.

What's next? Market sources forecast that prices for 2025 vintage I-RECs would stabilize around $4.80/MWh once the supply is replenished.

Reporting and analysis by Irina Breilean, Eklavya Gupte, Ivy Yin, Rebecca Li, Chirag Aggarwal, Muskan Agarwal, and Rachel Tan.