Concerns rise over SE Asian biodiesel feedstock quality

  • Market: Biofuels
  • 23/02/21

Biodiesel and renewable diesel producers are becoming increasingly concerned about the quality of palm oil mill effluent (POME) feedstock from southeast Asia.

Some traders have put the issue down to rapidly escalating demand and prices, encouraging suppliers to top up scarce supplies with inferior product.

South Korean producer SK Eco was forced to partially close its 250,000 t/yr biodiesel plant because of delivery of a bad batch of the raw material.

POME values have risen by $240/t over the past six months to $800-820/t fob Malaysia, the highest since Argus began assessing this market last February.

This has partly been fuelled by sharp increases in crude palm oil (CPO) costs, which touched 10-year highs last month on the back of labour shortages and adverse weather because of the La Nina weather phenomenon.

Malaysian CPO stocks fell to record low of 1.26mn t in December, the lowest since the national palm oil board began recording data in 2012, and third-month futures hit a peak of 3,888 ringgit/t ($961/t) on the fob Bursa Malaysia exchange as a result.

POME is considered an advanced feedstock under the EU renewable energy directive and so counts double towards transport fuel mandates in the region, making it increasingly sought after by blenders. A series of new renewable diesel and sustainable aviation fuel capacity coming on line in Asia-Pacific and Europe that is geared to use POME as a feedstock will only add to the number of firms fishing from a dwindling supply pool.

Some traders have cited a raft of higher export duties imposed on Indonesian palm oil products last year to subsidise the country's domestic 30pc renewable transport fuel mandate as a possible mitigating factor.

Export duties and levies total $248/t on CPO and $240.50/t on palm fatty acid distillate but just $35/t on POME in February, which may be incentivising suppliers to pump out off-specification material as the waste feedstock to lower costs and increase returns.


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27/03/24

European bio-bunker March prices firm on uncertainty

European bio-bunker March prices firm on uncertainty

London, 27 March (Argus) — Marine biodiesel prices firmed in the second half of March across Europe as higher levels in underlying markets combined with supply uncertainty to lend support to blend prices, despite limited demand. Very-low sulphur fuel oil (VLSFO) firmed by $16/t to $585.58/t on a dob Amsterdam-Rotterdam-Antwerp (ARA) basis and $17.47/t to $628.17/t on a dob Gibraltar-Algeciras-Ceuta (GAC) basis during 14-26 March compared with the two weeks prior. Gains in the fossil market were mainly attributed to an increase in European refinery turnarounds as well as stronger crude values. The front-month Ice Brent crude futures 16:30 GMT marker averaged $86.07/bl on 14-16 March, an increase of $2.92/bl from 1-13 March. Rising fossil levels were accompanied by increases in the biodiesel spot barge market. Prices for advanced fatty acid methyl ester (Fame) 0°C cold-filter plugging point (CFPP) on a fob ARA barge basis averaged $1,407.15/t during the last two weeks of March, a $53.58/t rise from 1-13 March. Used cooking oil methyl ester (Ucome) barges firmed by $47.47/t to $1,316/t during the same timeframe. Biodiesel prices have firmed from long-term lows on the back of a reduction in European production and limited demand. Higher prices in underlying markets were accompanied by an emerging theme of biofuel supply uncertainty. Participants reported that European suppliers may look to steer away from Chinese-origin biodiesel as the EU's anti-dumping investigation continues, with a conclusion by early 2025 at the latest. This was compounded by chronic disruption in the Red Sea, historically the most utilised route on the east-west voyage, leading to traffic redirecting via the Cape of Good Hope and a subsequent increase in freight costs. The potential shift in supply routes can be supported by changes in product flows. Some 19,000t of Fame has been exported from China with a marked destination in Europe in March so far, an 80pc drop from February's 106,000t — according to Kpler data. This month's exports are just 10pc of the 184,000t exported from China to Europe in March last year, according to Kpler. Declining volumes from China were accompanied by an increase in Fame volumes exported from northwest Europe intra-continental to 409,000t in March from 364,000t a month prior. GTT data pointed to a 47pc decline in Chinese biodiesel exports in January-February, coinciding with an increase in Chinese exports of used cooking oil (UCO) with northwest Europe the main destination. Uncertainty in the supply import pool coincided with raised concerns around the presence of "unestablished" biodiesel feedstocks in bunker fuels. A report from Lloyd's Register fuel oil bunkering analysis and advisory service (FOBAS) highlighted a correlation between engine fuel pump and injector related damage in vessels and the presence of cashew nut shell liquid (CNSL) in marine fuels utilised by the vessels. CNSL is one of the cheaper advanced feedstocks and can be eligible for Dutch renewable tickets (HBE-G) — which can help make marine biodiesel blends more appealing and price competitive to buyers, as well as reduce production costs. But participants noted that during tests conducted by shipowners to assess the compatibility of CNSL with marine engines, technical and specification limitations emerged because of potentially high acidity and metal contents. This prompted shipowners and bunker suppliers to avoid fuels that contain CNSL, which may further constrict the pool of biodiesel supply that can be integrated into the maritime sector. Argus assessed the price of B30 Ucome dob ARA, a blend comprising 30pc Ucome and 70pc VLSFO, at $839.17/t during 14-26 March — an increase of just under $22/t from the 1-13 March average. B30 Advanced Fame 0°C CFPP dob ARA range averaged just over $785/t during 14-26 March, higher by $16.19/t from the two weeks prior. B100 Advanced Fame 0 levels rose by $16.62/t to $1,159.79/t in the second half of March. B24 dob Algeciras-Gibraltar firmed to $812.61/t in 14-26 March, an increase of $19.50/t from prices on 1-13 March. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Argentina biofuel companies push for deep changes


27/03/24
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27/03/24

Argentina biofuel companies push for deep changes

Buenos Aires, 27 March (Argus) — Argentinian biodiesel companies are urging the government to speed up regulatory changes so they can ramp up production and exports. The association of oilseed producers (Ciara) is not only in favor of President Javier Milei's sweeping omnibus reform package , but is lobbying for deeper changes to increase the blending mandate, ramp up production and move to second-generation biodiesel production. The omnibus bill would change more than 100 articles in the energy sector, including the law that regulates biofuels. The bill was presented in December, but has stalled in congress since February. "Approval of the omnibus law is essential, because the current biofuels law is bad for the industry and bad for the consumer," Ciara's president Gustavo Idigoras told Argus . The changes proposed by the Milei administration would, among other things, eliminate price controls, open the door to investment in new technologies and oil-seed crops, such as camelina and carinata, increase exports, and let all companies in the biodiesel sector supply the domestic market. Under current rules, only small firms can supply the domestic market, while large industrial firms export biodiesel. The legislation also increases the blending mandate for biofuels to 7.5pc from 5pc. Ciara wants the mandate increased to 15pc, which would bring Argentina in line with what is planned for Brazil, where blending is at 14pc and should increase to 15pc under legislation recently approved by the Brazilian congress . The goal in five years should be for a harmonized Argentina-Brazil biodiesel market, Idigoras said. He also said the changes would have an immediate impact, because Argentina has installed capacity to produce 4mn metric tonnes (t)/yr of biodiesel, but is only producing 1.5mn t/yr because of restrictions in the domestic market and exports. Ciara forecasts exports to increase to at least 2.5mn t/yr if the regulatory changes are approved. Argentina exported approximately 280,000t in 2023, a historic low, because of drought. It exported 1.4mn t in 2022. Argentina has the right conditions for hydrotreated vegetable oil (HVO) plants and to produce sustainable aviation fuel and biofuel for the maritime industry, Idigoras said, adding that there is a window of at least 10 years where biofuels will play a key role in the energy transition. Green hydrogen will eventually be a competitor, but it will take time for it to scale up production to meet demand, he said. The industry could enact sector-specific modifications if the omnibus bill was not approved, but that would not be ideal, Idigoras said. Lawyers working on energy projects agree, saying investors would be less committed if changes were made through executive orders instead of laws. An executive order would have less weight because it depends on the administration in power, while the omnibus is a law approved by congress, according to Ignacio Criado, an attorney at the Tanoira Cassagne law firm. "The energy sector needs investment and the omnibus bill is a shortcut," he said. "It simplifies regulations and provides transparency." By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Bolivia opens first biodiesel plant to curb imports


27/03/24
News
27/03/24

Bolivia opens first biodiesel plant to curb imports

Montevideo, 27 March (Argus) — Bolivia inaugurated operations of a 1,500 b/d biodiesel plant this week, the first in the country and part of a strategy to lower crude imports. The plant, in the eastern Santa Cruz department, will use oil seeds, palm oil and recycled cooking oil as feedstock, according to state-run oil company YPFB. A second biodiesel plant that will also run on similar feedstocks is under construction in El Alto, in the highland La Paz region, scheduled for completion in November. Bolivia has traditionally imported crude, but years of declining oil and natural gas reserves and increased demand has required it to increase imports. It has exported gas to neighboring Argentina and Brazil via pipeline, but the falling reserves will force it to stop exports to Argentina in October. It plans to continue exporting to Brazil for the rest of the decade. Bolivia consumes around 35,000 b/d of diesel and 34,000 b/d of gasoline, but produces 12,000 b/d and 20,000 b/d, respectively. It imported a 150,000 bl shipment of crude from Argentina in early March, and plans to import 1.6mn bl this year. YPFB is also working on a hydrotreated vegetable oil plant in Santa Cruz, with a second one planned for La Paz. Bolivia is the tenth-largest soybean producer in the world, with output of 3.4mn t in 2023, according to the US Department of Agriculture's Foreign Agricultural Service. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Q&A: Singapore leads push for marine decarbonisation


27/03/24
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27/03/24

Q&A: Singapore leads push for marine decarbonisation

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Baltimore bridge collapse forces freight changes


26/03/24
News
26/03/24

Baltimore bridge collapse forces freight changes

Washington, 26 March (Argus) — Vessel traffic in and out of the Port of Baltimore, Maryland, has been suspended indefinitely in the wake of a container ship collision early today that brought down the Francis Scott Key Bridge, an accident that will force the rerouting of coal, car and light truck shipments. The prolonged closure of one of the largest ports on the US east coast could have a ripple effect on trade flows across much of the US, as shippers grapple for alternatives in the absence of a certain reopening timeline. Search and rescue efforts are still ongoing in the Patapsco River, after the 116,851dwt Dali headed to Colombo, Sri Lanka, slammed into a bridge support. The crew had lost control of the vessel. The Dali is owned by Grace Ocean and managed by Synergy Marine Group. The Maryland Port Administration said it does not know how long it will take for the shipping channel to be cleared and for traffic to resume. Shipping companies are bracing for a closure of at least two weeks, but many expect the clean-up effort could take significantly longer. President Joe Biden vowed the federal government will provide whatever resources are needed to get the port "up and running again as soon as possible." The port is a major trade hub for steam and coking coal, automobiles and scrap metal. Many market sources are still trying to determine whether the disruption will be dramatic enough to move prices. But coal markets were already being affected today. Baltimore is home to two key coal export terminals: eastern US railroad CSX's Curtis Bay Coal Piers and coal producer Consol Energy's Consol Marine Terminal. The facilities are upstream of the bridge, meaning ships will not be able to serve them until the route reopens. The terminals handle thermal and coking coal from Northern and Central Appalachia. They have a combined export capacity of 34mn short tons (30.8mn metric tonnes). The two terminals loaded 2.4mn t of coal in February, up from 2.1mn t a year earlier, according to analytics firm Kpler, mostly exports to India and China. An India-based trader said that the suspension of coal exports will probably raise prices in India, as brick kilns enter the peak production season in the summer. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value. Prices for deliveries to northern Europe are also likely to rise given that the Netherlands, Germany and Belgium combined are the second-largest market for North Appalachian coal. April API 2 futures rose by $2/t to $113.30/t. The incident has added a "level of volatility [which] could have big implications," a European paper broker said. The lack of information has prompted some coal producers to hold off on activating force majeure clauses in their contracts. Curtis Bay is served only by CSX, while CSX and fellow eastern carrier Norfolk Southern serve Consol. CSX said it is in contact with existing coal customers and contingency plans are being implemented. The railroad at this point intends to keep Curtis Bay open but will continue to assess the circumstances moving forward. Norfolk Southern did not respond to questions. Some scheduled Baltimore coal exports may be redirected to the other three eastern US coal export terminals in Hampton Roads, Virginia, but such reroutings likely will entail increased costs. Not all coal mines will be able to shift terminals. Such decisions will depend on available capacity in Hampton Roads. Exports from the three terminals in January reached a five-year high , signaling somewhat limited capacity. Mine location and railroad access may also determine whether coal can be rerouted, an industry source said. But some producers do not have much of a choice about trying to send coal to Hampton Roads. They may need the cash so will be forced into a decision. The producers most vulnerable to delays may be Consol and Arch Resources. Arch's Leer coking coal mine may be in the best position because it co-owns Dominion Terminal Associates in Hampton Roads with Alpha Metallurgical Coal Resources. The sudden lack of export capacity could put a floor under US coal prices, which have mostly been falling since last year amid low domestic demand. The competition to replace Baltimore coal exports could prevent further cuts, another coal trading source said. Metals sources say the accident will have only isolated effects on the global ferrous scrap market, but many market participants are still assessing the situation. The port is the 10th largest ferrous scrap export port in the US, and over the last five years an average of 44,000 metric tonnes/month of ferrous scrap was exported from Baltimore, according to US Department of Commerce data. But the port closure is likely to affect other freight. Baltimore is the nation's top handler of automobile traffic. Motor vehicles and parts accounted for about 42pc of all Baltimore port imports and 27pc of all exports, according to state data. The Port of Baltimore handled 847,158 cars and light trucks in 2023. "It's too early to say what impact this incident will have on the auto business — but there will certainly be a disruption," said John Bozzella, chief executive of industry trade group Alliance for Automotive Innovation. Dry bulk freight rates likely unaffected Several sources told Argus Baltimore's closure is unlikely to have a major impact on dry freight rates despite short-term interruptions to coal transports. "We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures means the collapse "may not have too much of an impact" on freight markets overall. Vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions from Baltimore. Kpler identified 17 vessels that will likely be impacted because they are either in the Port of Baltimore or were expected to load there in the coming days. By Abby Caplan, Gabriel Squitieri, Luis Gronda, Evan Millard and Brad MacAulay Port of Baltimore coal terminals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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