Commodity Tracker: 5 charts to watch this week

Global LNG trade is in focus this week as Freeport LNG ramps up production. Global wheat prices are likewise on center stage amid tightening supply. S&P Global Commodity Insights editors are also looking at Asia hours nickel trading on the London Metal Exchange, US offshore wind projects, as well as supply disruptions in the copper market.

1. Freeport LNG returns to the global gas market

What's happening? The Freeport LNG export terminal in Texas has resumed producing LNG and exporting cargoes after an eight-month outage that followed an explosion and fire at the facility on June 8, 2022. The return of the 15 million mt/year capacity export terminal stands to ease tightness in the global gas market and cut a US supply overhang. Freeport can export some 16 to 19 LNG cargoes per month when operating normally, per market sources.

What's next? Freeport's ramp up will be gradual – the operator received regulatory approval Feb. 21 to resume service on two of the facility's three liquefaction trains. Freeport said on the same day that it expected to reach three-train production of about 2 Bcf/d "over the next several weeks." Freeport's startup was expected to add to bearish LNG price sentiment in the near-term amid healthy European storage inventories following a warm winter and relatively tepid demand in Asia, although global LNG prices remain high relative to historical norms.

Related infographic: Freeport LNG's return shows impact of US supply on global gas market

2. Global wheat prices expected to soften further

What's happening? During the past year, global wheat supplies tightened in the aftermath of Russia-Ukraine war and continued weather concerns in North America. Shrinking global supplies had led to sharp increases in wheat export prices. However, wheat export prices have declined between 5%-11% on year, S&P Global Commodity Insights data showed.

What's next? Global wheat prices are expected to see further decline due to the likely rise in supplies across origins such as Australia, Canada and Russia. After a year of tightened supplies in the global wheat market, supplies are likely to normalize. According to the US Department of Agriculture, global wheat output is seen rising slightly to 783.8 million mt in marketing year 2022-23 (July-June).

Related infographic: Global wheat supply rebounds in 2023 after disruptive year

3. LME to resume Asia hours nickel trading from March 20

What's happening? The London Metal Exchange has announced plans to resume nickel trading during Asian hours, or pre-7:00 am London time on March 20, more than a year after the market was suspended following a two-day, 250% spike in the price of the metal. The LME said that it has implemented a series of measures to prevent a repeat of the events of March 7, 2022, including the implementation of a daily price limit set at 15% of the previous day's closing price across all metal trading.

What's next? According to the LME, these interim measures will "support the orderly reopening of the market, protect market stability and minimize the potential for future disorderly price moves." The LME also advised that the market will return to a 01:00 London time start in order to strengthen liquidity while the interim measures would be reconsidered as trading conditions return to normal.

4. US agencies working to add offshore wind projects

What's happening? Emphasizing a whole-of-government approach to boost floating offshore wind projects in several regions, the White House and multiple agencies Feb. 22 rolled out initiatives to support manufacturing of components, leasing of offshore waters, siting and environmental reviews of planned floating offshore wind facilities to meet Biden administration goals. Leaders at several agencies announced efforts to try and add 15 gigawatts of floating offshore wind by 2035 and reduce the cost of floating offshore wind projects by more than 70% by the same year.

What's next? The Department of Energy in March expects to announce winners of the floating offshore wind readiness prize, which will provide funding to improve domestic manufacturing of floating offshore wind components. It also plans to issue recommendations in March for offshore wind transmission development along the Atlantic Coast, officials said.

5. Supply disruptions hit copper market

What's happening? First Quantum has suspended copper ore processing operations at its Cobre Panama mine as it failed to reach a resolution with the Panama government by Feb. 23, after the local maritime authority blocked concentrate loading operations since Feb. 6. This follows a string of supply disruptions in South America and Indonesia since the start of 2023, which caused spot TC/RCs to trend downwards, defying initial market expectations of a surplus in the first half of 2023.

What's next? While the spot market had been generally quiet after the Lunar New Year holidays in end-January, sources expect this latest development to drive smelters back into the spot market if prolonged, pressuring spot TC/RCs toward the mid $70-s/mt level.

Reporting by Corey Paul, Sampad Nandy, Euan Sadden, Lucy Tang, Thomas Tiernan, Jared Anderson, Jesline Tang.