Brazil pine oleoresin supply to fall further in 2024
Brazilian pine oleoresin supply is expected to decline in 2024 as producers continue to grapple with tight margins and lower selling prices. The price weakness has forced many smaller tappers to abandon the market.
Brazilian Pinus elliottii pine oleoresin prices fell to 2,900-3,100 reals ($595-636) at the forest in mid-November, down from R6,300-6,500/t during the same month last year. Prices have been on a steady decline since November 2022, with values of gum rosin, a key product obtained from pine oleoresin, softening this year amid weaker downstream activity.
"Many smaller producers have left the industry," a Sao Paulo state pine oleoresin producer said. The exodus is largely because of poor tapping economics. Producers and buyers in Sao Paulo state, Brazil's largest producing region, estimate current production costs at the forest at between R2,400/t and R3,000/t. Lower prices and higher tapping costs have squeezed producer margins and weighed on business sentiment, according to market participants.
In southern Brazil, another key producing region, pine oleoresin supply fell in August-October as lower selling prices discouraged workers to collect the product, according to one producer. A pine oleoresin buyer said he can only acquire only 15pc of the product he needs because of the reduced availability.
With selling prices sometimes below production costs throughout this year, many smaller pine oleoresin suppliers have ended forest lease agreements. Forest owners lease areas for a share of the producer's selling price, which can reach up to 40pc of their revenues. In Sao Paulo state, a producer ended a lease agreement for one of several areas considered unproductive in the current market, a source said.
Official data on the number of pine oleoresin producers in Brazil is lacking. But buyers and producers estimate pine oleoresin supply in the 2023-24 tapping season could drop by 20-30pc. Producers obtaining less than 2.5-3 kg/yr of pine oleoresin per tree are expected to struggle the most. "Areas collecting 2.5 kg/yr per tree will stop," the chief executive of a pine chemicals company said.
Pine oleoresin is processed into gum rosin, and data from Argus' Global Trade Tracker (GTT) show Brazilian gum rosin (BGR) exports have also fallen. BGR exports have been declining since 2020 and are now close to levels seen in 2016. They fell from a peak of 97,425t in 2020 to 74,516t in 2022. Gum rosin processors in Brazil are the biggest consumers of pine oleoresin.
Brazilian Pinus elliottii pine oleoresin prices have picked up slightly since early November levels on the back of seasonally lower supply and higher bids. But the uptick has not changed the fundamentals for pine tapping as selling prices remain close to production costs, with many still sharing a portion of their revenues with forest owners.
Even if pine oleoresin prices increase, allowing for higher margins, it would take time for the producers which left the market to reactivate the forests and increase availability to the market. Reactivating a forest takes about six months as tappers need to prepare the extraction of the raw material months in advance, according to a source. Six-year old forest areas, which could be ready for tapping this year, will likely not add new volumes to the market as forest owners are delaying operations because of the current selling prices, another source added.
Higher pine oleoresin prices in recent weeks led to higher-priced gum rosin offers from Brazilian sellers into southern Europe. But one Brazilian supplier said there is no guarantee that pine oleoresin prices will continue increasing as European gum rosin buyers may push back for discounts amid soft downstream demand, which would again pressure prices and margins for pine oleoresin producers in Brazil.
![](https://public-assets.argusmedia.com/2023/11/22/bgrexports22112023012247.jpg)
Related news posts
Brazil turpentine shipments delayed by port backlogs
Brazil turpentine shipments delayed by port backlogs
London, 25 July (Argus) — Brazilian gum turpentine export shipments are being delayed by isotank availability that is significantly tightening owing to difficult booking schedules and port congestion in Asia-Pacific. Delays are close to a month for shipments going to India, sources said. In some cases vessels have been at a port for weeks, adding to delays caused by difficult booking schedules. With a number of Brazilian ports handling more goods than before, including Brazil's key port for pine chemicals exports Santos where cargo in the first half of 2024 hit a record for the period. There has also been congestion at Asian ports. "There is chaos in southeast Asia," a buyer in Asia said. "Ship lines confirm bookings just to cancel them later." India is Brazil's largest gum turpentine buyer, with most going into the camphor and aroma chemical markets during peak season in the second half of the year. India imported 12,509t of gum turpentine from Brazil in 2023, Global Trade Tracker (GTT) data show, the second highest since at least 2015. In 2022, India imported a record 12,944t of Brazilian gum turpentine, according to GTT. Volatile gum turpentine freight rates from Brazil to India has now incentivised several Brazilian suppliers to shift from cif to fob-based sales to avoid the risk of unpredictable isotank costs. Gum turpentine freight rates from Brazil to India have risen to around $7,000-7,500 per isotank from $2,500-3,000 levels in January 2024, one customer said. The escalating freight rates continue to put upwards pressure on the Brazil gum turpentine market, with prices rising amid steady demand from India, the US and Mexico. Brazilian Pinus elliottii gum turpentine spot export prices were assessed at $2,200-$2,250/t fob, Brazil port, on 15 July, up by more than 25pc from $1,650-$1,800/t fob, Brazil port, at the same time last year. The export prices are higher this year because of stronger demand from the US flavours and fragrance market, firm business activity into India and Mexico and lower buyer stocks. By Leonardo Siqueira Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Feedstock imports shake up US biofuel production
Feedstock imports shake up US biofuel production
New York, 24 July (Argus) — Waste from around the world is increasingly being diverted to the US for biofuel production, helping decarbonize hard-to-electrify sectors like trucking and aviation. But as refiners turn away from conventional crop-based feedstocks, farm groups fear missing out on the biofuels boom. Driven by low-carbon fuel standards (LCFS) in states like California, US renewable diesel production capacity has more than doubled over the last two years to hit a record high of 4.1bn USG/yr in April according to the Energy Information Administration. Soybean and canola processors have invested in expanding crush capacity, expecting future biofuels growth to lift vegetable oil demand. But policymakers' growing focus on carbon intensity, a departure from the long-running federal renewable fuel standard (RFS) that sets volume mandates for broad types of fuel, primarily benefits waste feedstocks, which generate larger LCFS credits because they are assessed as producing fewer emissions. Argonne National Laboratory's GREET emissions model, which has been modified by federal and California regulators for clean fuels programs, factors in emissions sources like fertilizers and diesel use on farms for virgin vegetable oils but not for used oils sourced from cooking operations. Refiners trying to maximize government subsidies are thus sourcing waste-based feedstocks from wherever they can find them. Through May this year, imports to the US under the tariff code that includes used cooking oil (UCO) and yellow grease rose 90pc from year-prior levels to more than 1.8bn lb (844,000t). While China represents most of that, sources are diverse, with significant sums coming from Canada, the UK, and Indonesia. Imports of inedible and technical tallow, waste beef fat that can be turned into biofuels, have also risen 50pc so far this year to 800,000lb on ample supply from Brazil. While soybean oil was responsible for nearly half of biomass-based diesel production in 2021, that share has declined to around a third over the first four months this year as imports surge (see graph). "Every pound of imported feedstock that comes in displaces one pound of domestically sourced soybean oil or five pounds of soybeans," said Kailee Tkacz Buller, chief executive of the National Oilseed Processors Association. Even as LCFS and RFS credit prices have fallen over the last year, hurting biofuel production margins and threatening capacity additions , imports have not slowed. Feedstock suppliers, many from countries with less mature biofuel incentives and limited biorefining capacity, might have few options domestically. And exporting to the US means they can avoid the EU's more prescriptive feedstock limits and mounting scrutiny of biofuel imports. More ambitious targets in future years, particularly for sustainable aviation fuel, "will create a lot of competition for UCO in the global market," said Jane O'Malley, a researcher at the International Council on Clean Transportation. But for now, "the US has created the most lucrative market for waste-based biofuel pathways." Incentives for US refiners to use waste-based feedstocks will only become stronger next year when expiring tax credits are replaced by the Inflation Reduction Act's 45Z credit, structured as a sliding scale so that fuels generate more of a subsidy as they produce fewer greenhouse gas emissions. While essentially all fuel will receive less of a benefit than in past years since the maximum credit is reserved for carbon-neutral fuels, the drop in benefits will be most pronounced for fuels from vegetable oils. Granted, President Joe Biden's administration wants the 45Z credit to account for the benefits of "climate-smart" agriculture, potentially helping close some of the assessed emissions gap between crop and waste feedstocks. But the administration's timeline for issuing guidance is unclear, leaving the market with little clarity about which practices farmers should start deploying and documenting. "While a tax credit can be retroactive, you can't retroactively farm," said Alexa Combelic, director of government affairs at the American Soybean Association. Squeaky wheel gets the soybean oil The concerns of agricultural groups have not gone unnoticed in Washington, DC, where lawmakers from both parties have recently called for higher biofuel blending obligations, prompt 45Z guidance, and more transparency around how federal agencies scrutinize UCO imports. There are also lobbying opportunities in California, where regulators are weighing LCFS updates ahead of a planned hearing in November. At minimum, agricultural groups are likely to continue pushing for more visibility into the UCO supply chain, which could take the form of upping already-burdensome recordkeeping requirements for clean fuels incentives and setting a larger role for auditors. Fraud would be hard to prove, but two external groups told Argus that the Biden administration has indicated that it is looking into UCO collection rates in some countries, which could at least point to potential discrepancies with expected supply. More muscular interventions, including trade disincentives, are also possible. Multiple farm associations, including corn interests frustrated that the country's first alcohol-to-jet facility is using Brazilian sugarcane ethanol , have asked the Biden administration to prevent fuels derived from foreign feedstocks from qualifying for 45Z. The possible return of former president Donald Trump to the White House next year would likely mean sharply higher tariffs on China too, potentially stemming the flow of feedstocks from that country — if not from the many others shipping waste-based feedstocks to the US. Protectionism has obvious risks, since leaving refiners with fewer feedstock options could jeopardize planned biofuel capacity additions that ultimately benefit farmers. But at least some US agriculture companies, insistent that they can sustainably increase feedstock production if incentives allow, see major changes to current policy as necessary. By Cole Martin Waste imports crowd out soybean oil Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House passes waterways bill
US House passes waterways bill
Houston, 23 July (Argus) — The US House of Representatives overwhelmingly approved a bill on Monday authorizing the US Army Corps of Engineers (Corps) to tackle a dozen port, inland waterway and other water infrastructure projects. The Republican-led House voted 359-13 to pass the Waterways Resources Development Act (WRDA), which authorizes the Corps to proceed with plans to upgrade the Seagirt Loop Channel near Baltimore Harbor in Maryland. The bill also will enable the Corps to move forward with 160 feasibility studies, including a $314mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. Water project authorization bills typically are passed every two years and generally garner strong bipartisan support because they affect numerous congressional districts. The Senate Environment and Public Works Committee unanimously passed its own version of the bill on 22 May. That bill does not include an adjustment to the cost-sharing structure for lock and dam construction and other rehabilitation projects. The Senate's version is expected to reach the floor before 2 August, before lawmakers break for their August recess. The Senate is not scheduled to reconvene until 9 September. If the Senate does not pass an identical version of the bill, lawmakers will have to meet in a conference committee to work out the differences. WRDA is "our legislative commitment to investing in and protecting our communities from flooding and droughts, restoring our environment and ecosystems and keeping our nation's competitiveness by supporting out ports and harbors", representative Grace Napolitano (D-California) said. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Resonac to optimize petchem business
Japan’s Resonac to optimize petchem business
Tokyo, 23 July (Argus) — Japanese petrochemical producer Resonac plans to optimize part of its petrochemical business by creating a new wholly-owned subsidiary by 1 August. Resonac decided on 23 July to set up Crasus Chemical, which will take over production of basic petrochemical goods from Resonac. It aims to set up the subsidiary as an independent, listed company to clarify and facilitate performance evaluations and to simplify a chain of command to speed up decision making. Resonac plans to achieve quicker decarbonization of its petrochemical production and to enhance competitiveness and profit growth. Crasus will be in charge of manufacturing and selling basic petrochemical goods like ethylene and propylene, goods made from acetic acid and synthetic resins. Resonac owns the 618,000 t/yr Oita ethylene cracker in south Japan's Oita prefecture that will will also be transferred to Crasus. Petrochemicals has accounted for around 20pc of Resonac's sales revenues. Japan's petrochemical firms have attempted to optimize their businesses with intensifying international competition and shrinking domestic demand. Mitsubishi Chemical has also tried to reorganize its basic petrochemical business, although it has yet to announce firm plans. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more