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S&P Global Platts
February 2021
Measuring crude oil Abu Dhabi’s energy Fuel oil markets Lithium sector targets
carbon intensity transition plans in 2020 greener production
Voluntary carbon markets
take off
Insight
ISSN 2153-1528 (print)
Contributors
ISSN 2153-1536 (online)
Publisher
Murray Fisher, +1 720 264 6644
murray.fisher@spglobal.com Ben Beth Charlotte
Brooks Brown Bucchioni
Editor
Global Lead, Managing Editor, Associate Editor,
Emma Slawinski, +44 (0)20 7176 0365 Recycled Plastics Middle Distillates Oil
emma.slawinski@spglobal.com
Copy Editors
Alisdair Bowles, James Leech
Production Manager Peter Henry
David Sullivan, +44 (0)20 7176 0268 Compton Edwardes-Evans
James
It’s more than
david.sullivan@spglobal.com Senior Associate Editorial
Burgess Project Consultant, Director,
Production Office Technical Editor Platts Analytics Power News
Platts Insight Magazine
1800 Larimer, Suite 2000
Denver, CO 80202
a commodity,
Advertising Sales – Americas
Paul
Robin Mason, +1 631 642 2600 Kenneth Rosemary Hickin
robin.mason@spglobal.com Foo Griffin Associate Editorial
Advertising Sales – Managing Editor, Managing Editor, Director,
it’s a journey.
LNG Russia News Oil News
Asia-Pacific
Sheryl Tan, +65 6216 1191
sheryl.tan@spglobal.com
Advertising Sales – EMEA
Irina Bondareva, +44 207 176 0253 Martina
Klancisar Rajesh Henrique
irina.bondareva@spglobal.com
Team Lead, Nair Ribeiro
Article Reprints & Permissions Design and Managing Editor, Editor,
The YGS Group, Production Residual Fuels Metals
+1 717 505 9701, ext 105
plattsreprints@theygsgroup.com
Subscribe free at:
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S&P Global Platts Jonty Dania Tamara
20 Canada Square, 9th Floor Rushforth Saadi Sleiman
London, E14 5LH, UK Senior Director, Senior Editor, Managing Editor,
Pricing Middle East News Residual Fuels
President
Saugata Saha
Global Head of Commodities,
Pricing and Market Insights
Paula
Dave Ernsberger Vanlaningham Dex
Senior Wang
Global Head of Analytics
Methodology and Manager,
Chris Midgley Market Specialist LNG Pricing
Energy Transition: it’s your journey
With the latest information, research and analysis at your fingertips,
Platts you can understand the transition arc and inflection points of today’s
energy market, and spot new opportunities to form its future.
Know today. Shape tomorrow.
Visit: spglobal.com/shaping-energy-transition
Contents February 2021
14
08 30 40 48
8 Scaling up 30 Closing the loop 48 Fuel oil markets in 2020
Voluntary carbon markets are on the up, and could become a Recycled plastics are rapidly becoming commoditized, an Fuel oil markets faced the twin challenge of IMO 2020 and the
vital tool in global decarbonization efforts important step to encourage more widespread global use COVID-19 crisis last year. Here’s how they shaped up
14 Commodities bounce back 36 Insight from Dubai 52 Insight from Moscow
The recent cross-asset price surge has been seen by some What role do ADNOC and its dynamic CEO have in Abu Dhabi’s How strong is Russia’s negotiating position within OPEC+?
commentators as evidence of a new commodity supercycle plans for energy transition and attracting foreign investment? Economic indicators suggest the country is on a firm footing
20 Looking upstream 40 Making waves 56 Asia’s energy hub looks to the future
As oil producers focus on upstream emissions, carbon intensity Spot activity is rising at a burgeoning new Asian LNG trading hub Singapore has a long history as an oil trading center, but is
of crude grades may start to influence price differentials spanning India and the Middle East proactively planning for a lower-carbon future
26 Power plays
The second edition of S&P Global Platts’ report tracking the
expansion of eight oil and gas majors into renewables and
low-carbon tech
44 Insight Conversation
The president of global shipping organization BIMCO reflects
on a turbulent year and discusses the next phase of maritime
emissions reduction
60 Green growth
Lithium is an essential component of batteries that will displace
fossil fuels, but greening the metal itself poses challenges
56
4 Insight February 2021 February 2021 Insight 5
Editor’s Note Explore Insight Refineries
Jamnagar
Ulsan
Regions
Europe
Africa
Asia-
OPEC+
Russia/
Central Asia
Middle
Pacific East
Ruwais
North Latin America/
America Caribbean
Port Arthur
Grades
Zhenhai
Key Platts Benchmarks Light
sweet
Light
sour
After the tumult of 2020, the energy world is looking to vaccine rollouts, stimulus packages AGS Dated Urals Dubai Oman
Our website spglobal.com/platts contains an extensive selection of free news, videos, podcasts Pernis Medium
sweet
Medium
sour
Brent
and interactive content about energy and commodities. Here’s a selection of highlights Paraguana Heavy Heavy
and new green deals to bring some positive influence, whether in terms of demand or sweet sour
investment levels. Trg Cos ADCo Nio EF As QtL Pos Lav Kir Kw BasHvy
0.00% 0.04% 0.11% 0.13% 0.17% 0.18% 1.22% 1.67% 1.93% 2.23% 2.52% 4.20%
73.10° 48.20° 58.40° 40.00° 45.20° 48.50° 41.30° 31.50° 34.00° 34.30° 31.00° 23.60°
Alg Ag Sah QI WTIM Ose Nem SP LLS ES WTI Mas CPC SiL UmL Mb Ol ArEL Ur Uza Ban ArM My
But while there are broad signs of recovery, political uncertainty and commodity price 0.00% 0.04% 0.10% 0.13% 0.15% 0.20% 0.21% 0.26% 0.33% 0.37% 0.42% 0.51% 0.54% 0.57% 0.70% 0.79% 0.89% 1.00% 1.44% 1.84% 2.45% 2.54% 3.33%
68.70° 47.90° 43.20° 36.00° 42.00° 39.60° 39.80° 58.40° 36.70° 36.70° 40.80° 34.10° 46.20° 35.10° 38.90° 40.20° 38.70° 39.20° 31.10° 33.90° 31.80° 30.90° 21.80°
surges at the start of 2021 are a reminder that we are still living in a moment of historic NWSC Nk Ba Cab BH Tro Eko QDFC Dr Pl BNB TEN Fo ESPO FG Bur Ji Das Om ArL Db BasL KL
volatility and change. 0.01%
63.00°
0.04%
42.40°
0.10%
42.80°
0.12%
32.60°
0.17%
39.30°
0.18%
34.50°
0.21%
38.90°
0.26%
57.00°
0.29%
33.00°
0.37%
33.20°
0.40%
37.50°
0.43%
33.80°
0.54%
37.30°
0.55%
34.70°
0.66%
73.10°
0.87%
32.30°
0.87%
32.30°
1.11%
39.20°
1.38%
30.50°
1.96%
33.30°
2.13%
30.40°
3.16%
28.80°
3.89%
21.30°
EFC BHo Sha Daq Az BL Jb Zaf Esp Lul Ko Med TN Lz Og JSv Th Eu Ma Sue AlS ArH WCS
0.04% 0.04% 0.09% 0.11% 0.14% 0.18% 0.25% 0.25% 0.33% 0.35% 0.37% 0.47% 0.52% 0.51% 0.75% 0.80% 0.90% 1.03% 1.82% 1.64% 2.37% 2.75% 3.59%
The global energy transition continues to accelerate. China has set out a net-zero emissions 55.00° 38.60° 42.20° 32.30° 35.00° 32.80° 37.60° 30.90° 32.20° 30.50° 31.70° 32.90° 34.20° 32.10° 35.60° 28.00° 32.30° 35.40° 30.00° 29.90° 28.10° 27.80° 20.90°
Alb Dul Aga Chm Er Eg Gal For WR Dj Paz Gir Hi Gr Hu Sat Mos HBI Cu IrHvy VnMdm Miss Sor
goal for 2060; the US, under new President Joe Biden, has rejoined the Paris Agreement; 0.02%
51.70°
0.08%
37.60°
0.10%
37.40°
0.13%
26.90°
0.16%
34.80°
0.17%
27.30°
0.23%
36.30°
0.28%
30.30°
0.31%
30.00°
0.34%
27.60°
0.41%
25.60°
0.42%
29.70°
0.53%
33.00°
0.59%
29.00°
0.64%
28.30°
0.81%
27.00°
0.87%
28.30°
1.15%
35.20°
1.38%
28.80°
1.77%
29.50°
1.85%
27.00°
2.95%
27.60°
3.38%
19.20°
and national governments are racing to put out plans and strategies for green growth and ArSL Rab Se Dar Escr CS CLOV Us Mer VG Eb Sch Hd RnHvy Cpt Vs Lo IrL Ca Or VH1 RGh D16
Emma Slawinski technologies such as hydrogen and CCS.
0.04%
50.60°
0.07%
33.40°
0.09%
34.50°
0.12%
25.00°
0.17%
33.50°
0.20%
26.30°
0.25%
32.80°
0.27%
29.00°
0.32%
28.80°
0.33%
17.00°
0.40%
19.80°
0.44%
24.90°
0.53%
24.40°
0.61%
22.80°
0.70%
19.10°
0.83%
24.30°
0.87%
23.30°
1.46%
33.60°
1.41%
17.50°
1.63%
23.30°
1.85%
23.50°
2.50%
24.00°
4.10%
16.00°
Tap Dob Min Py Co Esc Bo Qin Boz Yom Vnc Cl Dal Juba Kr Sh Li Al Rub Per Na VH2 Sq
Editor 0.03%
44.60°
0.09%
21.40°
0.09%
33.90°
0.13%
19.30°
0.14%
30.70°
0.19%
24.10°
0.24%
30.60°
0.28%
16.50°
0.29%
16.90°
0.34%
16.70°
0.37%
17.40°
0.47%
23.3°
0.51%
23.20°
0.56%
17.10°
0.70%
14.00°
0.84%
24.20°
0.90%
22.50°
1.27%
19.60°
1.33%
12.70°
1.79%
13.50°
1.96%
19.00°
2.50%
16.00°
3.50%
9.00°
Carbon markets look set for a period of rapid evolution in the coming year. The overhaul of the
European Trading System will start to play out, while China is pushing ahead with an ambitious0 19
refi
ns
nery ru : 1,419,0
00
b/
2 d
nationwide emissions trading scheme. In the US, too, there have been growing calls for a
0.7%
11.5%
runs: 773 runs: 678
nery nery ,00
Interactive
efi ,00 efi
comprehensive carbon price going beyond the current fragmented regional initiatives – and
01
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1.7%
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/
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runs: 54
5,0
Interactive
d
2
d
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refi 00
Platts Periodic Table of Oil S&P Global Platts Atlas of Energy Transition
2.2%
19 un
ery r s: 331,
some optimism that the Biden administration could introduce such a system.
43.4% 23.6%
b/
20
fin 00
d
ry runs: 442 re
0.5%
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efi
0b
9
3.6%
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45.3% 37.2% 72.0% 28.00% ry runs: 14
00
9r
/d
Our interactive guide to 150 crude oil grades with Navigating5 a pathway to a low-carbon, greener
ne
201
63.3% 23.7%
b/d
efi
,0
00
2019 r
58.6% 28.7%
100%
b/d
Meanwhile, activity in the voluntary carbon markets is ramping up, and with it the need for price trends and geographic distribution of demand, global economy requires a new plan. The S&P Global
0.7% 20.2% 58.6% 34.5%
13.6% 12.5% 6.0%
6.9%
consistent standards and greater transparency, as Jonty Rushforth writes in our now updated to connect crude streams with Platts Platts Atlas of Energy Transition is your map to the
Reliance SK Energy ADNOC Motiva Sinopec Shell PDVSA
cover story (page 8). benchmarks and key refineries. sustainable commodity markets of the future.
Energy transition is in evidence across all asset classes, affecting everything from fuel
choices in the shipping sector to production processes for lithium (page 60). In the oil and gas
sector, scrutiny of emissions spans the entire supply chain, and upstream carbon intensity
is a measure that is set to have increasing currency in the market, potentially creating new
demand and pricing patterns (page 20).
Podcast
This edition of Insight also highlights the constant evolution of commodity markets. We Platts Future Energy
delve into the recycled plastics sector and look at how trade in these products is becoming
globalized and more liquid, as demand rises and quality becomes more uniform (page 30). A podcast series providing insights on energy transition, tomorrow’s fuels
and energy sources, and the implications for commodity markets, from oil
to power to metals.
We also look at the emergence of a new LNG trading hub encompassing India and the Middle
East (page 40), and assess how the fuel oil market responded to last year’s introduction
of a global sulfur cap combined with dramatic demand destruction from the coronavirus
pandemic (page 48).
Finally, for some perspective on whether we are really entering a new supercycle, turn to
page 14, where Paul Hickin assesses commodity market indicators in the context of the Video
global economy. Market Movers
plattsinsight@spglobal.com Your weekly guide to the biggest events and trends influencing energy and
commodity markets, delivered in three regional editions every Monday.
6 Insight February 2021 February 2021 Insight 7
Scaling up
Voluntary carbon markets have a significant role to
play in global decarbonization, but need rigorous
standards and greater transparency to build trust,
write Jonty Rushforth and Paula Vanlaningham
8 Insight February 2021 February 2021 Insight 9
Scaling up Scaling up
“ Every year, the world emits approximately 51 billion mt of greenhouse
gases into the atmosphere. To avoid the worst impacts of climate change,
we need to reduce that number to zero– and we need to do it in the next
30 years. This will be one of the hardest challenges humanity has ever
faced, but we can meet it if we act boldly to reduce emissions worldwide
Bill Gates, Foreword, Taskforce on Scaling Voluntary Carbon Markets Final Report “
N
early five years after the signing of Platts CEC vs daily heards count
the Paris Agreement, the urgency Platts CEC ($/mtCO2e) # of heards
1.2 25
of the global climate crisis is more
apparent than ever before, and with 1.1 20
that urgency has come a stronger move 1.0 15
towards collective action to mitigate
the worst impacts of climate change. 0.9 10
0.8 5
Not only are national governments instituting
0.7 0
policies to meet the climate objectives set out by 04-Jan 10-Jan 16-Jan 22-Jan 28-Jan 03-Feb
the Paris Agreement, shareholders and consumers
are also driving new action within the private sector. Note: Platts CEC is a daily assessment of CORSIA-eligible carbon credit prices;
heards refers to bid, offer and trade information collected by Platts through the day
exponentially over the next several years. Indeed,
it needs to, if there is to be any hope of meeting the The volume of trade in voluntary
Corporations large and small are now setting ambitious objectives of the Paris Agreement.
carbon credits is becoming
Source: S&P Global Platts
carbon neutrality goals, with many aiming to go “net-
zero” within the next twenty years. While voluntary carbon markets have been around
In the private sector, the focus has turned increasingly
dominated the discussion around global emissions
reductions. Instead, the voluntary markets are a
since the Kyoto years, they have matured rapidly in a
very short time, and now encompass a wide range of
significant, and the market is set
towards voluntary carbon credits, which businesses
can purchase to reduce their carbon debts. Voluntary
product of the private sector initiatives that fall
outside of the compliance jurisdictions defined by
different project types, geographies and standards.
These can range from large-scale renewable hydro to grow exponentially over the
Carbon Credits are generated by specific projects that the United Nations Framework on Climate Change. projects in India, to reforestation efforts in Brazil.
avoid, reduce or remove greenhouse gas emissions Some of these initiatives are semi-regulatory, such However, the quality of the carbon credits available next several years
from the atmosphere, and are verified and validated as the International Civil Aviation Organization’s in the open market can vary widely, which has led to
according to a set of independent standards created Carbon Offsetting and Reduction Scheme for the development of carbon Standards (with a big ‘S’
by coalitions of NGOs and carbon market participants International Aviation (CORSIA), whereby airlines can for emphasis) to provide some measure of structure NGOs and corporations. These organizations, or
throughout the last few decades. reduce their carbon debts through the use of either to the market. Standards, as they are known, have created their
credits or sustainable aviation fuel, while others are own methodologies and systems to define and certify
The voluntary markets are, crucially, different to entirely voluntary. projects across the world that work to either limit,
regional compliance markets like the European New carbon “Standards” completely avoid, or remove greenhouse gas emissions
Union’s Emissions Trading System or North America’s The volume of trade in voluntary carbon credits is from the atmosphere. Project developers draw on
Regional Greenhouse Gas Initiative, which have so far becoming significant, and the market is set to grow Markets for these carbon credits have arisen without those Standards to turn ideas into projects and these
government definitions and structures, and have projects into carbon credits. And the credits are
instead been created by partnerships between
10 Insight February 2021 February 2021 Insight 11
Scaling up
Transparency is undoubtedly one of the greatest
challenges facing the voluntary carbon markets. A
complex web of project developers, standards, project
financers, and brokers are involved in selling carbon
credits, and there is a wide variety of projects on offer –
all of which can trade at different prices per metric ton
of CO2e, depending on project type, location, standard
certification, vintage and location. This combination
of variables means most activity is still over-the-
counter, with credits bundled together into larger
portfolios for buyers.
In order for the voluntary carbon markets to scale
up to the degree that will ultimately be necessary to
meet the challenges of the climate crisis, something
needs to change.
The effort by the airline industry to introduce some
standardization to this complex market is one of the
more lauded approaches. The CORSIA program allows
airlines to reduce their carbon debts through the use of
credits from the voluntary markets, initially voluntarily,
and later under a mandate.
verified, validated and held in the registries of those
same Standards for trade in the open market.
In order for the voluntary carbon The set of specifications contained within CORSIA
provides a framework for aggregating credits. A
A technology company might want to look for credits markets to scale up to the buyer can pick any of a range of project types, from
a range of standards, and use their credits to meet
from a project that uses new tech, whereas a food its obligations. It is a simplification that has already We believe that this coverage will be a key factor in
company might want to invest in those that use soil degree that will ultimately be started to generate increased liquidity in the global helping the voluntary carbon markets to grow. By giving
buyers and sellers baseline pricing in a broad range of
management techniques. Hence the description carbon markets. And it is a simple place to start for
voluntary carbon markets – because they have resulted
from the free choices of a myriad of companies to
necessary to meet the challenges producing price benchmarks. That’s why S&P Global
Platts started publishing an assessment of CORSIA-
areas, Platts prices ensure more efficient outcomes
and ultimately provide a stable framework for growth.
of the climate crisis, something
engage with the environmental challenges ahead eligible credits, Platts CEC, from January 4, 2021. A And growth in the carbon markets means a faster
without the compulsion of regulation. single number, from a world of complexity. path to reducing the world’s overall greenhouse gas
footprint: a faster path to net zero.
The Standards help to mitigate a problem that nearly needs to change This is just the start of a new phase in price
transparency in the carbon markets, however. Platts
sank the voluntary carbon market in the early 2000s:
a lack of faith that a carbon credit was really doing plans to start publishing a suite of prices in this space,
what it said it was doing. While the development of Voluntary Carbon Markets released its final report, in order to cover not just the commoditized CORSIA-
stronger standards to verify project outcomes has calling for greater transparency in what has hitherto eligible credits, but also the full range of project types Go deeper
helped rebuild faith in the voluntary markets, the scale been an opaque, over-the-counter market. The and co-benefits that the voluntary market represents.
of growth expected in the next few years is likely to Taskforce also identified six key areas where greater The price range in that space is significant – everything Explore S&P Global Platts energy transition coverage
throw up additional roadblocks in the development of a efforts are required to achieve a large, transparent, from 30 cents/mt for some renewable credits all the through videos, podcasts and more on PlattsLIVE
functioning market. verifiable and robust carbon market: establishing core way to hundreds of dollars per ton for some credits
carbon principles, core carbon reference contracts, generated from mineralization projects that potentially
At this year’s World Economic Forum – a mostly- infrastructure, offset legitimacy, market integrity and lock CO2 away for thousands of years and more.
virtual Davos, given the restrictions on international demand signalling.
travel prompted by COVID – the Taskforce on Scaling
12 Insight February 2021 February 2021 Insight 13
Commodities
bounce back
The surge in commodity prices in late 2020 and early
2021 is in some ways at odds with a global economy
still gripped by the COVID-19 crisis. Paul Hickin
unpacks the factors that brought about the rally
and examines longer-term prospects
14 Insight February 2021 February 2021 Insight 15
Commodities bounce back Commodities bounce back
T
he rise in Brent crude oil prices Stock building and an infrastructure boom are A new supercycle?
since November has some notable among the factors that have led to strong buying
across commodities.
2020 surge in prices coincides with plummet in US dollar index
figures in global commodity markets JKM prices lead rally Commodities’ inverse relationship to dollar holds during 2020
heralding the arrival of a “supercycle.” Each individual commodity has its own story to tell 300
Index (Jan 2, 2020 = 100)
450
S&P GSCI Index US Dollar Index
110
JKM LNG
and while oil has been dragged back by moribund jet $14 trillion global stimulus
250
This comes as optimism around COVID-19 vaccines fuel demand, it has also been propelled higher by the 400 helps boost commodities demand 105
and dampens dollar
has supported the demand outlook and OPEC+ has 1 million b/d production cut by Saudi Arabia on top of 200
been managing output, even if some have questioned OPEC+ reductions and improvements in global mobility. Thai 5% broken Iron ore 62% Fe
350 100
whether this surge in prices is warranted with the world 150 white rice CFR China
still in the midst of a pandemic. Platts Analytics sees Dated Brent prices as 300 95
fundamentally in the mid-$50/b range towards 100
LME copper cash
The rally in the broad spectrum of commodities end-2021. However, it notes “the strength in the 250 90
50
assessed by S&P Global Platts has prompted reflation trade, which has buoyed all risk assets in Dated Brent crude
heavyweights to outline their reasoning for the recent months, could move the set point of that trend 0 200 85
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
superycle – a protracted rise in key prices. higher/lower.”
Can the price rally be sustained in 2021? Price sensitivity
“What is the definition of commodity supercycle? It’s Indeed, the power of fiscal spending on commodities 2020 price surge End-2021 price outlook to dollar
a structural upward shift in demand…and we have should not be downplayed.
a structural upward shift in demand occurring,” Jeff Oil $55/b
21-year low 9-month high
Currie, head of commodities research at Goldman “With crude oil together with gold being two of the most Key factors:
in April in December
Sachs told Platts in a recent interview. liquid commodity markets, the reflation demand often OPEC+ cuts %
+293 nths Up 9%
tends to be concentrated in these two markets,” said Transport use $13.24/b in 8 m o $51.97/b from High
China demand end-2020
In early 2021 copper and iron ore, vital industrial Ole Hansen, head of commodity strategy at Saxo Bank.
products, were close to highs not seen since early last
decade, and the LNG benchmark, Platts JKM, reached Oil demand is relatively price inelastic and much more LNG $8.86/MMBtu
All-time low % s 6.5-year high
unprecedented levels, boosted by economic stimulus responsive to shifts in trend regarding income – and Key factors: 27 th Down
in April +7 mon in December
41% from
spending, Chinese demand and a weaker dollar. by extension – fiscal stimulus, tax incentives and Strong Asian demand
n8 end-2020
i
other economic drivers. As such, the pace of economic Supply-side constraints $1.825/MMBtu $15.1/MMBtu
Shipping tightness Medium
Some $14 trillion was spent on fiscal packages around recovery remains critical.
the globe last year, according to the International
Monetary Fund, and for much of 2020 there was a The global economy has been recovering from its Rice
2020 lowest 8-year high
strong inverse correlation between the US currency lowest point, seen last April, but is not likely to reach Key factors: in January in April No forecast
and the S&P GSCI, a benchmark for investment in the 2019 levels before the third quarter of 2021. Drought on output available
commodity market. Strength of Thai baht $415/mt +37% $567/mt High
Asian demand in 3 months
A weaker dollar makes commodities cheaper for Supercycle signs
holders of other currencies. Iron ore 1-year low 9-year high $112.5/mt*
Currie, who called the first supercycle in the 2000s, Key factors: in March in December Down
29% from
“We do seem to be entering into somewhat of said similar forces were at play with “structural China demand end-2020
a commodities supercycle, but this is more the underinvestment in the old economy” and noted supply Brazil shortages $80/mt +121%
s $177/mt
in 9 month High
Infrastructure boom
consequence of supply and demand factors aligning shortages are severe despite weak COVID-19-induced
temporarily, resulting in significant spikes in prices,” demand weakness.
said Chris Midgley, head of S&P Global Platts Analytics. Copper 3-year low 8-year high $8925/mt*
While metal prices were turbocharged last time Key factors: in April in December
“A key driving factor is the healthy growth being round by industrialization and urbanization in China China demand Up 15%
Chile, Peru shortages $4772/mt +67% $7964/mt from High
observed in the East, led by China, where, unlike the in particular, this time the “green” revolution – which in 8 months
EV growth end-2020
West, we see demand has already recovered to above leading economies like the US and China may be
2020 levels,” Midgley said. starting to embrace – could be the main driver of a
Source: S&P Global Platts, S&P Global Platts Analytics, International Monetary Fund *Analyst consensus
long-term commodity bull run. Infographic research by Paul Hickin, Robert Perkins, Diana Kinch, Henry Edwardes-Evns and Charlotte James. Design by Martina Klancisar
16 Insight February 2021 February 2021 Insight 17
WHAT’S
STOPPING DATA. WE GET IT.
YOU?
Give us your toughest data management challenges
Do you want to maximize profits, manage your operations
costs and increase shareholder value?
Currie said that in the case of oil, capital expenditure
had fallen an unprecedented 40% in the first half of Oil demand is relatively Do you want to streamline and simplify all your data needs
2020 and noted that even oil demand would be boosted with efficiency and ease?
by spending on the energy transition, due to the price inelastic and much
volume of oil consumed in the course of green energy
infrastructure projects. more responsive to shifts Do you want your data work for you and not against you?
Goldman Sachs says that a new era of policies aimed at
social need will likely create a cyclically stronger, more in trend regarding income Do you want access to all the data you need, including
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demand outlook, which is where the supercycle could internal siloed data and 13,000+ data reports from over
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US oil production peaked at around 13 million b/d in
While many analysts are still cautioning against a rapid late 2019 and has since fallen to around 11 million b/d. Do you want to automate your data, analytics and integration
rise in oil prices, there is a similar consensus growing
that there is a risk of a price spike further out, given the The International Energy Forum said in December of 3rd party applications so you can optimize your
billions of dollars in upstream spending cuts and the the oil and gas industry will have to overcome business decisions?
possibility that US shale will struggle, as a marginal its pandemic-induced retrenchment and boost
producer, to plug shortfalls quickly. investment by at least 25% annually over the next
three years to prevent a supply crunch that could send
JP Morgan’s head of oil and gas Christyan Malek told prices skyrocketing.
Platts in a recent interview that the risk of oil prices
spiking above $100/b in the coming years has increased “With global oil demand still running close to 6 million
due to the impact of COVID-19 and likely ESG and barrels/day below pre-coronavirus levels we do not see
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18 Insight February 2021 Download a free copy of ZE’s whitepaper: Data Management Trends That Can Mean The
Difference Between Success and Failure!Looking upstream
As the energy transition gathers pace, the oil and gas
industry faces increasing scrutiny of the full life cycle
and upstream carbon intensity of energy sources, with
significant market implications. By Peter Compton
20 Insight February 2021 February 2021 Insight 21Looking upstream
A
s oil investors and consumers look Select IOC emission reduction targets
to reduce their carbon footprint (%)
120
and producers seek to reduce Eni
BP
100 Shell
emissions, growing demand for “low- Repsol
Equinor Occidental Total
carbon oil” – oil produced at a lower rate of 80
greenhouse gas (GHG) emissions – could 60
create a non-uniform shift in the global 40
ConocoPhillips
OMV Suncor
supply curve and impact oil pricing. Hess Galp
20 ExxonMobil
xon
nM
n
Marathon
0
The global economy will remain dependent on oil as Chevron EOG
a primary energy source for the foreseeable future. -20
2015 2020 2025 2030 2035 2040 2045 2050 2055
Despite wide-reaching and accelerating efforts to
reduce GHG emissions, S&P Global Platts Analytics
Notes: For those IOCs that have announced upstream-specific targets, those targets are
Future Energy Outlooks forecasts global oil demand represented. For IOCs that have multiple targets and target dates, the earliest target is
represented. Icon size represents 2019 total oil production.
will plateau just below 115 million b/d in the latter half Source: S&P Global Platts Analytics, company reports
of the 2030s and first half of the 2040s.
Even in the Future Energy Outlooks 2-degree-Celsius Upstream emissions by source, select US fields
scenario – which restricts global emissions to a % (source proportion to total emissions)
level that would limit cumulative global temperature 100
change to just 2 C from pre-industrial levels –
global oil demand is still expected to slowly grow 80 Other equipment leaks
throughout this decade. Compressors
60 Completions and workovers
Pneumatic devices and pumps
In the face of forecast oil demand growth, an increased
40 Atmospheric tanks
global focus on environmental, social and governance Combustion refers to the quantity of emissions per barrel of oil Agency (EPA) provides a look into the emissions
factors is encouraging oil and gas market participants 20 Flaring and venting produced (kg CO2 equivalent/barrel). Unlike carbon sources at a handful of US fields, represented in the
to produce, invest in, and trade energy sources with footprint – which measures a company or project’s bar chart to the left.
lower associated emissions. 0 absolute emissions – carbon intensity provides the
Bakken Permian Gulf of Mexico
measure of emissions on a per-barrel basis, enabling
Sixteen of the 20 largest international oil companies
Source: US Environmental Protection Agency
the market to normalize the upstream emissions Market response
(IOCs) based in Europe and North America – efficiency of a particular barrel or particular operator.
representing 17 million b/d of crude oil production National, international, and company-level efforts to Carbon intensity can also be applied to different Growing demand for low-carbon oil will result in
– have announced targets to reduce either their reduce GHG emissions in the oil and gas sector are segments of the oil industry, including transportation, significant impacts to various portions of the oil
upstream emissions or overall operational emissions. clearly well under way, while global appetite for crude refining, and refined product consumption. market including capital investment, supply, and price.
The chart above right displays these companies’ oil and its derived products continues to expand. Stakeholder calls for less carbon-intensive energy
emissions reduction targets and target dates, with the The result of this combination of factors is a rapidly- Oil production is a highly complex process involving sources and investment opportunities have begun to
icon size representing 2019 total oil production. increasing demand for low-carbon oil – oil that is dozens of phases and emissions sources which vary translate into capital flows toward supply sources with
produced at a lower rate of emissions. widely from field to field. However, the majority of GHG lower carbon intensities and away from those with
In addition to producers setting individual targets, emissions created by the production process can be higher carbon intensities.
some have formed associations aimed at collectively narrowed down to a handful of process dynamics.
reducing emissions. In July 2020, the Oil and Gas An industry standard PetroChina announced plans to invest $1.5 billion
Climate Initiative (OGCI) – a consortium of 12 member The most significant of these are flaring and venting of annually over 2021-2025 in low-carbon emissions
companies with combined crude oil output of The foundational metric necessary for market natural gas, and energy required for onsite drilling and projects. The OGCI has established a $1 billion
approximately 25 million b/d – announced its target to participants is carbon intensity – the ratio of carbon pumping, which is typically generated by hydrocarbon fund to “invest in technologies and projects that
reduce the collective carbon intensity of its upstream (or carbon-equivalent) emissions to unit of output. combustion. These processes alone account for accelerate decarbonization in oil and gas, industry,
operations by 9% by 2025. Applied to the upstream oil industry, carbon intensity approximately 70-80% of overall upstream emissions. and commercial transport.” Banks, sovereign wealth
Field-level data from the US Environmental Protection funds, and other sources of external capital have
22 Insight February 2021 February 2021 Insight 23Looking upstream Looking upstream
S&P Global Platts global energy demand scenarios
Base case (million boe/d) 2°C scenario (million boe/d)
150 150
Renewables
125 125
Oil
100 Gas 100
Renewables Gas
75 75
Coal Oil
50 50
Nuclear
25 Nuclear 25 Coal
Combustibles Combustibles
0 0
2010 2020 2030 2040 2050 2010 2020 2030 2040 2050
Source: S&P Global Platts Future Energy Outlooks
also declared intentions to this end as they look to come to devalue crude produced at a relatively high
reduce the carbon footprint of their portfolios while rate of emissions. As the market for low-carbon oil
maintaining competitive returns. matures, prices will likely reflect the associated
upstream carbon intensity, with crudes of lower carbon
As for upstream operators themselves, they will intensity trading at a premium to those of higher
be forced to consider the carbon intensity and carbon intensity.
future associated costs when making their own
development decisions. Platts Analytics is testing a series of models estimating
field-level upstream carbon intensity, incorporating
Growing demand for low-carbon oil could create a non- Platts’ datasets, as well as relevant public domain
uniform shift in the global supply curve. Depending data. Our working models incorporate several metrics
on the levels at which buyers seek to offset the including crude gravity, reservoir age and depth, flared
carbon emissions of their full cycle operations and gas volumes, and in-situ steam generation. We have
producers take steps to directly reduce or offset the applied our primary working model to a pilot group
emissions associated with their upstream operations, of 50 oil fields of various natures and locations – a
the costs associated with these actions will likely UPSTREAM
selection of theCARBON INTENSITY/API
results are shown below. FOR SELECT FIELDS Establishing field-level upstream carbon intensity new features are likely to emerge in addition to the
be incorporated into production costs. Because allows for more in-depth analysis of the implications. concepts highlighted above. We will be observing with
actual production costs do not correlate with carbon Such further analysis will include quantifying the anticipation as the first barrels trade with carbon
Upstream carbon intensity/API for select fields
intensity, the cost impact of incorporating carbon differential between the price of a standard barrel (e.g. intensity considered as an attribute, and a new era in
reduction efforts into production costs vary along (API) Brent, WTI) and the price of an offset – or upstream the global oil market emerges.
50
the supply curve. carbon-neutral – iteration of the same barrel.
Tengiz Huizhou: 333 CI, 39 API
45 Agbami Bakken Escravos: 306 CI, 36 API
Dukhan
Okono: 194 CI, 41 API
40 The aforementioned impacts to the global supply curve
Pricing carbon intensity Azeri
Upper Zakum will be quantifiable, as well, by incorporating the cost
35
Go deeper
Kirkuk
Sapinhoa Mars of offsetting emissions in the cost of production. In a
Forcados Yokri
Finally, growing demand for low-carbon oil could 30 market seeking low-carbon oil and limiting capital and
Lula-Iracema
impact the traded price of oil, particularly in terms of 25 Al Shaheen Jubarte market demand for high-carbon production, fields with
S&P Global Platts Future Energy Outlooks provides a
differentials between crude grades and lower-carbon 2019 production high carbon intensity of production would see carbon-
20 (million b/d) Roncador pragmatic view of the long-term trajectory of energy and
varieties of the same grade of crude. The market could 600 inclusive production costs rise.
15 200 Rubiales commodity markets, supporting informed decisions in this
apply carbon intensity as an attribute of the crude,
100 rapidly changing space
similar to the way it considers sulfur. 10 As the low-carbon oil market develops in 2021 and
10 20 30 40 50 60 70 80 90 100 110 Platts Analytics works with market participants
All else equal, sulfur devalues crude roughly in line Upstream carbon intensity (kg CO2 e/b) to ensure provision of valuable data and insights,
with its prevalence in oil. Likewise, the market could Source: S&P Global Platts Analytics, S&P Global Platts World Oil Supply
24 Insight February 2021 February 2021 Insight 25Power Plays
Power plays
European majors continue to lead the way in installed
renewables capacity and wider electrification, S&P Global
Platts’ second report on energy transition strategies of
global oil and gas companies shows. By James Burgess,
Henry Edwardes-Evans and Emma Slawinski
J
companies showed a change in tone, at least. Most
ust as leading international oil striking was ExxonMobil’s announcement that it would
companies were revealing ambitious reduce upstream emissions intensity by 15-20% by
plans in the renewable energy 2025, after its vocal resistance to setting such targets.
space early last year, the coronavirus
We surveyed the situation again towards the end
pandemic turned energy markets on of 2020. While our headline rankings for the eight
their heads, upending demand forecasts companies – based on operational assets and current
and forcing companies to revise activities – did not change, the beefed-up future
their assumptions and outlooks. targets of several of the companies stood out, and this
is reflected in changed ambition scores.
S&P Global Platts analyzed Big Oil’s energy transition All bar Shell, ExxonMobil and Chevron enhanced
ambitions and strategies in April 2020. These plans targets for installed renewables capacity, either
were in train before the pandemic struck, so the increasing levels, or fleshing out interim targets,
question was whether the coronavirus would delay or setting a pathway for achieving the longer-term more
accelerate the transition. aspirational goals.
With the pandemic foreshadowing a lower-carbon Likewise, many have added to installed capacity since
system with reduced fossil fuel consumption, the April 2020. Total added over 2 GW between our first
answer has definitively been an acceleration – at and second survey. It then made a further significant
least in Europe. acquisition in January, taking a stake in India-based
Adani Green Energy that adds 1.18 GW of solar assets
Total, Equinor, Repsol, BP and Shell are all taking to its portfolio (not captured in the infographic).
determined steps to realize ambitious targets, adding
renewables capacity, making further acquisitions in BP, Repsol, Shell and Eni all lifted installed capacity,
the downstream energy retail and EV charging space while Chevron’s installed capacity fell, with the
and setting out interim targets for renewables that get divestment of a US geothermal facility it previously
them to the long-term installed capacity figures and listed as an asset. However, the company announced
CO2 emissions targets. a partnership to develop 500 MW of renewable
generation to support its operations across several
US majors ExxonMobil and Chevron have not bought global locations including the Permian Basin.
into this vision yet, but recent statements from the
February 2021 Insight 27Power Plays
Power plays: energy majors’ transition strategies
International oil companies had already made in-roads into the renewables space at the start of 2020. The coronavirus pandemic has only accelerated
the trend in Europe, while US-based companies continue to focus on traditional fossil fuel assets. The power plays ranking is based on current
operational assets across renewables, CCS, downstream energy retail, sustainable transport and battery storage. The ambition ranking is based on
stated renewables capacity targets.
IOCs are leveraging their impressive trading and
Ambition
Total installed CCUS Downstream Sustainable Battery
ranking
ranking
Nov-20
renewable capacity* (million mt/yr) energy retail transport storage
Installed renewables capacity targets Total | Wind | Solar Large | Moderate | Minimal presence marketing reach to help others manage risk around
TOTAL Large focus on solar, with interests in
batteries, wind, retail
5100 MW
increased volatility, while selling new services via
1 1 35 GW 0.13
7 GW
No breakdown of wind and solar.
established brands
2020 2025 2030 2035 2040 2045 2050 Larger solar focus
SHELL Inroads into retail power 922.55 MW Eni and Repsol have taken significant steps to move and 19 GW of hydro), a significant increase relative
and sustainable transport
their renewables businesses forward. Both provided to 2019, as a result of booming installations in China
2 6 No explicit
capacity target
486 MW
0.95
-
1.1 guidance on installed capacity ambitions out to during December.
2030, pushing them above Shell and Equinor in the
436.55 MW “ambitions” rankings. BP and Repsol reduced dividend “Besides offshore wind, where oil companies have
payments in part to increase investment in their already established themselves as large players,
BP Existing focus on solar, wind and EV charging, ambitious 2500 MW
renewables targets 50 GW renewables divisions. the competitive advantage of IOCs, especially versus
3 2 1679 821
MW MW -
vertically-integrated utilities, is still not completely
Equinor has made a final investment decision on its clear,” S&P Global Platts Analytics head of global power
Dogger Bank A and B windfarms in the North Sea with planning Bruno Brunetti said.
2020 2025 2030 2035 2040 2045 2050
partner SSE Renewables, with the first 1.2 GW stage
REPSOL Ramping up renewables in Spain and Chile, 1078 MW expected online by summer 2023. Eni also became a “That might be a reason why IOCs’ renewables
targeting green H2 at home
partner, buying a 20% stake December 4. And Equinor capacities still represent a very small portion of the
4 4 12.8 GW 699 MW (hydro) - made a decisive step into the green hydrogen space [global] annual solar and wind adds.”
1.7 2.8 3.6
4.4 5.2 December 7, joining Shell in the NortH2 project in
2020 2025 2030 2035 2040 2045 2050 379 MW the Netherlands. “Although COVID-19 has seen some project disruptions
or delays, global wind and solar capacity added
ENI Large biofuels producer, with ambitions in 276 MW this year will be well above expectations and 2019
solar and wind
Over Beyond renewables
5 3
Over levels, especially thanks to a sharp rebound in China,
25 GW 55 GW 220 MW -
15 GW which accounted for about half of the total annual
3 GW 5 GW
Ownership of renewables is one piece of the larger additions. China’s reported wind additions have been
2020 2023 2025 2030 2035 2040 2045 2050 48 MW
electrification story. IOCs are also leveraging their exceptionally high, mainly as a result of end-of-year
EQUINOR Aims to become global offshore wind major 500 MW impressive trading and marketing reach to help others deadlines to receive subsidies,” Brunetti added.
manage risk around increased volatility, while selling
6 5 12-16 GW 71 MW
(356 MW planned)
0.75 new services via established brands. But there are ExxonMobil said in September that returns from
4-6 GW areas where all the IOCs remain weak, notably in the renewables were insufficient, while slashing spending,
386 MW
2020 2025 2026 2030 2035 2040 2045 2050 (8100 MW planned) crucial power networks that are needed to integrate writing off up to $20 billion in impairments and
booming renewables. maintaining dividend payments.
CHEVRON Leveraging downstream networks 18.41 MW
for low-carbon gas, liquid fuels
And in terms of nailed-on financial commitments, More recently, Shell said its focus was less on
7 7 No explicit
capacity target
1.91 MW
1.7
-
2.1
the IOCs generally remain focused on their core building and running renewable energy assets than on
businesses, squeezing as much value as they can procuring green supply for customers.
16.5 MW from fossil fuel assets, and Repsol’s 25% of capital
expenditure dedicated to low-carbon projects is far “You do not need to put a lot of capital necessarily at
EXXONMOBIL Focus on CCS and R&D
on low-carbon technologies higher than the proportion committed by the others. play to get access to the electrons. Our strategy is more
8 8
8.86
No explicit - value-oriented than focusing on just the generation
0 MW 9.86
capacity target
The capacity additions pale in comparison to the capacity, which will tend to be the lower end of the
Methodology: The power plays ranking is based on current owned, operational assets across renewables, CCS, downstream energy retail, sustainable transport and battery storage, with
overall renewables market. S&P Global Platts Analytics returns in that value chain,” Shell’s chief financial
greater weighting given to renewable generation capacity. The ambition ranking is based on stated renewables capacity targets. Listed installed capacity is calculated based on owned share estimates that global wind and solar additions in officer Jessica Uhl said in February.
and is correct as of Nov. 30, 2020. Footprints shown by colored circles have been assigned based on best available qualitative and quantitative information, focusing on currently owned
assets and active large-scale projects and businesses. 2020 totaled 264 GW (130 GW of solar, 115 GW of wind
Source: S&P Global Platts, company reports *Total renewable capacity includes solar, wind, hydro and geothermal
Infographic research by James Burgess, Henry Edwardes-Evans and Emma Slawinski. Design by Martina Klancisar
28 Insight February 2021 February 2021 Insight 29Closing the loop
Recycled plastics are moving closer to true commodity
status as demand for the material grows. Ben Brooks
discusses recent dynamics that signal a burgeoning
global marketplace
30 Insight February 2021 February 2021 Insight 31Closing the loop
VIRGIN POLYMER FEEDSTOCKS DISPLACEMENT
BY RECYCLED PLASTICS
O
n January 1, 2021 the EU introduced Virgin polymer feedstocks displacement
by recycled plastics
a plastics tax of Eur800/mt on plastic
(million b/d)
packaging that is not recycled. 4
Forecast
Chemical
The levy is just the latest example of policies being 3 recycling
enacted by governments across the world to tackle
the issue of plastic pollution. A raft of new legislation, 2
along with voluntary commitments by major users
Mechanical
and producers of plastic, aims to rid the world of 1
recycling
plastic waste and is pushing demand for recycled
plastics ever higher.
0
2015 2020 2025 2030 2035 2040
S&P Global Platts Analytics forecasts that Source: S&P Global Platts Analytics
mechanically recycled plastics will displace over
1.7 million mt of virgin polymer feedstocks by 2030,
compared with 688,000 mt in 2020. Feedstock costs mean R-PET is no longer a cheap alternative
For the ambitious waste reduction plans to succeed ($/mt)
800
requires the evolution of recycled plastics into
efficient, global commodity markets. There are signs
that this is already happening. 600
Virgin PET
Feedstock costs
serve local demand, as recycling rates can never be
100%. This causes companies to look further afield.
A virgin polymer buyer can be
Post-consumer
Towards commoditization
PET Bottle Bales
FD NWE In Europe, demand is exceeding the potential certain that plastic bought from
400 of both the local and regional markets, leading
Recycled plastics have gone from localized
participants to look to Southeast Asia, in particular,
for additional supply, bringing the region into a growing
one supplier will be the same as,
marketplaces, where demand is based purely on cost
effectiveness against virgin equivalents, to a global
200
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21
global marketplace.
or at the very least, compatible
market where demand is focused on the highest-
with, that from another supplier
Post consumer PET Bottle bales series based on weekly prices up to May 13,
value material.
when Platts began daily assessments. Plastics to fit the mold
Source: S&P Global Platts
The value of recycled plastics – and it is substantial – is their reliance on virgin plastic and increase their use Larger marketplaces and more market participants
beginning to be unlocked. It is this value that is driving of recycled material. In some cases, this is being require a degree of product standardization. way of arbitrages are differing product specifications
the commoditization of plastic waste markets and may, backed up by taxes. and levels of contamination, as well as concerns
ultimately, help tackle plastic waste pollution. Simply In virgin plastics markets, this is not a concern. A virgin over traceability across different regions, and even
put, there will be no sense in discarding a material into The UK’s version would charge GBP200/mt on plastic polymer buyer can be certain that plastic bought from within the same region. Waste collection systems can
the natural environment when it has such a high value packaging that does not contain 30% recycled content one supplier will be the same as, or at the very least, vary hugely, even within the same country, yielding
and can be exchanged in an efficient market. by April 2022. S&P Global Platts analysis shows the compatible with, that from another supplier. There is a different compositions of waste to be recycled and
tax would be more costly for market participants than consistency of technical properties, volume and colour. different qualities of recycled material. You get out
A number of different factors are helping to drive adhering to minimum recycled plastic content, despite what you put in.
commoditization in the recycled plastics markets. the heftier price tag compared with virgin plastics. On a global scale, this allows arbitrage economics to
Some, such as an increase in the number of aid in balancing global supply and demand. That is why Buyers want to be sure of product quality but they also
participants active in the market, have stemmed The effect of these policies has been to boost the prices for polymers in different regions tend to trend want to be sure that their material, particularly that
from legislation. number of market participants, predominantly in a similar fashion. It is also why a global view of these collected in developing countries, is being sourced
buyers – or “users” of plastic packaging – increasing markets is essential. legally, is what it says it is, and that workers across the
Various governments, beginning with Europe but more competition and necessitating greater supply and, value chain are being treated fairly. The “S” in ESG –
recently in the US and across Asia, are mandating therefore, a larger marketplace. Already, there are Product standardization in recycled plastics is trickier. environmental, social and governance – is as important
that participants in certain industries, predominantly signs that supply in local markets is insufficient to They are, after all, derived from waste. Standing in the as the “E” when it comes to recycled plastics.
those that work with plastic packaging, decrease
32 Insight February 2021 February 2021 Insight 33Closing the loop Closing the loop
Large-scale investments in standardization are now
being made by some of the biggest companies across SE Asia R-PET clear flake price lags behind Europe,
the waste management industry all the way through to US amid high export costs
the fast moving consumer goods industry. ($/mt)
1000
FD Northwest Europe
In Europe, where the most established recycled
plastics markets are found, levels of key contaminants FOB Los Angeles
in R-PET clear flakes, such as PVC, acetaldehyde and 800
benzene, which all affect how a beverage bottle looks
FOB SE Asia
and performs, as well as having health implications,
600
are moving lower and in some cases are now negligible.
Production is also becoming more consistent, meaning
buyers can be sure that each separate batch will
400
perform in the same way. Jul-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Source: S&P Global Platts
In Southeast Asia, Suez, Veolia, Coca-Cola and
Indorama, among others, have made investments in
new plants to produce R-PET clear flakes with low
Recycled-virgin PET price relationship has changed
in recent years
levels of PVC content. S&P Global Platts pricing data
clearly shows that a reduction in PVC contaminant (Eur/mt)
levels correlates to an increase in market value of
500 Going global Participants are moving away from long-term fixed
R-PET clear flakes. In some cases, this premium for 400 price contracts and are choosing to take much shorter
material with a PVC content of less than 30 parts per 300 These developments in both Southeast Asia and the US time periods as reference points.
million (ppm) can be $50/mt-100/mt compared with are making material produced in different regions more
200
material with up to 100ppm PVC content. alike, meaning more options for market participants This became particularly apparent in spring 2020,
100 – whether buyers or sellers, and regardless of when spot market bids and offers were reported to
US recycled PET is also becoming more uniform and 0 their location. S&P Global Platts with the proviso that they were
showing reductions in contaminant levels. This push is valid for only 24 hours. Again, this points to the need
-100
being driven by California, where a minimum recycled Regional recycled plastics markets are exerting for more data, on a more granular level, providing
plastic content in PET bottles will apply from 2022, -200 increasing influence over the global marketplace, more transparency.
2009 2011 2013 2015 2017 2019 2021
starting with 15%. Those affected by this legislation S&P Global Platts pricing data shows. And if any
– chiefly beverage bottle producers – will demand Source: S&P Global Platts further evidence were needed, it was provided in early Plastic pollution is a global issue that requires a
high-quality material so that the consumer cannot tell 2021 by a tight container market. global response, and the development of a large
a recycled bottle from a virgin bottle. and liquid market for recycled plastics can play an
the fibre and textiles markets. However, more and Europe and the US recycled PET markets saw price important role in this effort. Unlocking the value of
The California R-PET clear flake market is largely more material is entering the market with levels no increases at the beginning of the year, in part due to a plastic waste will mean less slips through the net. And
dominated by material with a PVC contaminant level higher than 10ppm PVC, bringing it much closer to the lack of supply amid a shortage of containers to import understanding that value is key to driving the plastics
of up to 100ppm, reflecting that the US R-PET sector standard seen across Northwest Europe and feeding material from Asia. These gains outstripped those seen industry forward.
is geared towards lower-grade end markets, such as growing demand for high-quality material. in Southeast Asia as participants there struggled to
send material to Europe and the US West Coast.
US recycled PET is also becoming more uniform and Increased global trade in recycled plastics has
also driven an increase in liquidity and new
showing reductions in contaminant levels. This push is
contracting dynamics. Go deeper
Where participants were once satisfied with linking Explore S&P Global Platts coverage of recycled plastics and
being driven by California, where a minimum recycled supply or purchasing contracts to the relevant virgin
price, or fixing prices for an entire year, these practices
learn more about R-PET and HDPE price assessments here
plastic content in PET bottles will apply from 2022 now mean that contracts quickly cease to reflect the
true value of material.
34 Insight February 2021 February 2021 Insight 35You can also read
