In this week's Market Movers: The US watches for sanction evasion as US-Iran nuclear talks reach a pivotal point, container shipping rates from Asia to North America could rise starting this week, US coal prices remain bearish into Q1, and a California grid operator looks to expand past the real-time market.
The Biden administration is laying the groundwork for a more aggressive stance with Iran as it attempts to break an impasse in the nuclear talks. This week, the Treasury Department will send a delegation to the United Arab Emirates to warn about sanctions evasion. The Vienna talks, aimed at restarting the 2015 deal and dropping US oil sanctions, have stalled since June, and according to Platts Analytics are the top oil market risk for 2022. A deal would add 1.4 million barrels per day of oil supply to the market, while a collapse would test global spare capacity.
This brings us to our social media question of the week: What repercussions in the global oil market should we expect if nuclear talks with Iran fall through? Tweet us your thoughts using the hashtag #PlattsMM.
In shipping, container shipping rates from Asia to North America could increase as of Tuesday as retailers prepare to restock inventories early next year. Shippers want to get their cargoes loaded before China's Lunar New Year starting February 1, which workers will want to celebrate after forgoing many of their travel plans in 2021. But Asian export hubs are experiencing widespread shortages of empty containers needed to load the goods. This will give shipping lines more freedom to ask for higher rates from those North American importers with the most urgent requirements.
US spot coal prices are expected to remain bearish into Q1 amid cheaper natural gas prices and milder-than-expected temperatures. Softening prices aren't uncommon in December when most spot tonnage has already been placed under contract. Although coal suppliers are tapped out for the balance of 2021, domestic utilities are mostly comfortable heading into winter inventory, especially amid sub-4 dollars per MMBtu NYMEX gas futures. Particularly volatile are Powder River Basin coal prices, which recently began trending downward, reversing the coal's price climb all summer into late fall when PRB prices hit an all-time high.
In power markets, the California Independent System Operator is continuing its Extended Day-Ahead Market design stakeholder process to expand the Western Energy Imbalance Market beyond the real-time market. At a meeting on Thursday, stakeholders will form teams focused on transmission, resource efficiency and greenhouse gas emissions. The teams will spend the first three months of 2022 creating a straw proposal. EDAM design is expected to be finalized by the end of 2022 with the first set of utilities in testing in 2023. The goal is to onboard participants in 2024. Currently, the Western Energy Imbalance Market allows entities outside of Cal-ISO's balancing authority area to participate in the ISO's real-time market.
The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen. Thanks for kicking off your Monday with us and have a great week ahead.