Calumet reports 2Q loss, hopeful for RD margin recovery
US specialty refiner Calumet reported a second quarter loss as debt costs outweighed a slim operating profit, but the company said it expects wider renewable fuels margins.
Calumet reported a loss of $39mn in the second quarter compared to a loss of $22mn in the same three months of 2023 as interest expenses on its debt more than offset an 11pc increase in sales revenue and an operating profit of $6.2mn in the most recent quarter.
The company reported positive operational results with its Montana Renewables plant and specialty products business — which makes lubricants, fuels and asphalt — both running at record throughputs in the second quarter.
The Montana Renewables refinery in Great Falls produced 23,000 b/d of fuels including 12,000 b/d of renewables, up from a total 19,000 b/d and 7,00 b/d of renewables in the second quarter of last year. Calumet's overall business processed 86,000 b/d of feedstocks in the quarter, up from 74,000 b/d in the same period last year.
Renewable fuels producers have faced narrowing profits this year, but Calumet thinks there are multiple factors supporting a recovery in renewable diesel (RD) profits, which it makes at its Great Falls refinery.
Declining agricultural feedstocks costs, lower renewable fuel imports, shuttered biofuels plants and existing plants focusing on sustainable aviation fuel (SAF) are some of the "positive catalysts" coming for RD margins, chief executive Todd Borgmann said on an earnings call Friday.
There are also positive demand factors largely coming from legislative support such as additional states opting in to the low carbon fuels standard and increased renewable volume obligations, Borgmann said.
Borgmann said the company is optimistic that the EPA will correct Renewable Volume Obligations, "rather than forcing additional capacity to close and delay the energy transition. It's hard to predict exactly how these will play out in the very near-term, especially during an election season."
Calumet is undergoing discussions with the US Department of Energy for a loan that will help finance an expansion of its SAF production, making it clear on today's earnings call that the company does not intend to progress with the project without a government loan. The company produced just under 2,000 b/d of SAF in the second quarter.
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2024 RD production outlook up, 2025 down: EIA
2024 RD production outlook up, 2025 down: EIA
New York, 10 September (Argus) — The US Energy Information Administration (EIA) today upped its forecast for 2024 domestic renewable diesel (RD) production but continued to trim its projections for 2025 as challenging economics for refiners persist. The US is expected to produce on average 208,000 b/d of renewable diesel this year, EIA said Tuesday in its latest Short-Term Energy Outlook (STEO), up by around 1pc from August's forecast. Renewable diesel consumption is expected to hit 237,000 b/d this year, an increase of 1.3pc from the prior month's STEO. But next year, EIA now expects 236,000 b/d of renewable diesel production, down by 3.2pc from the prior forecast and down by 19.7pc from the agency's initial projection in January this year of 294,000 b/d. The agency is also forecasting renewable diesel consumption to reach 255,000 b/d in 2025, a 2.3pc decrease from its estimate last month. Renewable diesel producers have struggled over the last year, as ample supply of fuels used for compliance with government clean fuel programs has helped depress the prices of environmental credits and hurt production margins. More capacity has come online this year — with EIA recently pegging production of renewable diesel and related biofuels like sustainable aviation fuel at an all-time high of 4.9bn USG/yr in June — but uncertainty persists about whether future capacity additions will come on line as planned. EIA also upped its projection for US net imports of renewable diesel, raising its 2024 forecast by 7.1pc to 30,000 b/d and its 2025 forecast by 5.6pc to 19,000 b/d. While a federal tax credit starting next year is expected to discourage biofuel imports, since the incentive can only be claimed for fuel produced in the US, EIA's projections have inched upwards over the course of this year. Biodiesel output target up US biodiesel production this year is expected to average 105,000 b/d, up by around 1pc from August's STEO. US Biodiesel consumption should reach 121,000 b/d this year according to the EIA, down by 0.8pc from the prior forecast. For 2025, EIA raised its outlook for biodiesel production by 5.3pc to 100,000 b/d and for biodiesel consumption by 4.4pc to 94,000 b/d. Today's outlook also includes for the first time more granular data about biodiesel and renewable diesel "that better capture how biofuels are being consumed and the share of total distillate fuel they account for," EIA said. While the agency expects total distillate fuel oil consumption to fall slightly this year, biofuels will account for 9pc of that consumption, up from 8pc last year and 5pc in 2022. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Methanex to acquire OCI’s methanol business for $2bn
Methanex to acquire OCI’s methanol business for $2bn
Houston, 9 September (Argus) — Methanol producer Methanex announced Sunday that it will acquire OCI's international methanol business for $2.05bn. As part of the transaction, Methanex will acquire four primary assets, including a 910,000 t/yr methanol facility and 340,000 t/yr ammonia facility in Beaumont, Texas. Methanex will acquire OCI's 50pc interest in the 1.7m t/yr Natgasoline methanol plant in Beaumont. The acquisition of Natgasoline is subject to a legal proceeding between OCI and Proman, the other 50pc holder in Natgasoline, over certain shareholder rights. If the dispute is not resolved within a certain period, Methanex has the option to exclude the purchase of the Natgasoline joint venture and proceed with the rest of the transaction. The transaction also includes OCI HyFuels, a producer of green methanol products such as biomethanol and bio-MTBE, and trading and distribution capabilities for renewable natural gas (RNG) and ethanol. Additionally, Methanex will acquire an idled 1m t/yr methanol facility in Delfzijl, Netherlands. The purchase price includes $1.15 billion in cash, the issuance of 9.9 million shares of Methanex valued at $450 million and the assumption of about $450 million in debt and leases. The acquisition of fertilizer producer OCI began over a year ago, according to OCI officials. "We identified Methanex as the natural owner of OCI Methanol at the outset of our strategic process, which we initiated in the spring of 2023," OCI executive chairman Nassef Sawiris said. This acquisition moves Methanex, primarily a methanol maker, into the ammonia sector. "From an operating perspective, we have a shared culture of safety and operational excellence, and we expect the OCI team will help us build new skills in ammonia while enhancing our capabilities in the evolving business of low carbon methanol production and marketing," Methanex CEO Rich Sumner said. The deal is expected to close in the first half of 2025. The transaction has been approved by the boards of directors of the two companies and is now awaiting certain regulatory approvals and other closing conditions. The transaction is also subject to approval by a simple majority of the shareholders of OCI. The largest shareholder of OCI, has signed an agreement to vote for the transaction. By Steven McGinn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
East-west marine biodiesel spread near six-month low
East-west marine biodiesel spread near six-month low
London, 6 September (Argus) — The east-west marine biodiesel spread narrowed amid firm demand for the B24 blend in Singapore and lacklustre spot marine biodiesel demand in northwest Europe in recent sessions. The east-west marine biodiesel spread — the premium held by B30 used cooking oil methyl ester (Ucome) dob ARA to B24 Ucome dob Singapore — was marked at $47.50/t on 5 September, its narrowest since 19 March. The spread narrowed amid a noted increase in demand from Asian-based shipowners who embark on voyages to Europe ahead of the implementation of FuelEU Maritime regulations in Europe next year — according to market participants. The latter had also reported an increase in B24 demand in Singapore from containerships seeking scope 3 emissions rights that can then be passed on to cargo owners. Scope 3 emissions rights can be obtained on a mass-balance system, allowing shipowners flexibility with regards to the port at which a blend can be bunkered. Argus assessed B24 dob Singapore prices at an average of $720.70/t on 1 July–5 September this year, compared with $757.70/t on 8 February–28 June following the launch of the B30 Ucome dob ARA price on 8 February. Consequently, the east-west marine biodiesel spread was marked at an average of $95.34/t on 1 July–5 September, compared with $74.57/t on 8 February–28 June. A wider east-west spread would incentivise shipowners to opt for the B24 blend in Singapore rather than ARA, when operationally viable, to meet the voluntary scope 3 demand from their customers. Rising demand in the Singapore bunkering hub was further supplemented by higher sales of marine biodiesel blends at the port. According to official data released by the Maritime and Port Authority of Singapore, sales of marine biodiesel blends in the second quarter of the year were marked at about 161,400t — higher by 34,500t from the previous quarter. This was also higher by 52,600t from the second quarter of last year. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Idemitsu completes biofuel trial for bunkering vessels
Idemitsu completes biofuel trial for bunkering vessels
Tokyo, 5 September (Argus) — Japanese refiner Idemitsu has completed a test of mixed biofuel using fatty acid methyl ester (Fame) for bunkering vessels in the Hokkaido area ahead of commercial use. Idemitsu carried out a trial for 10 months starting in September 2023, using a 24pc Fame mixture of used cooking oil collected from convenience stores in Hokkaido with existing marine fuel oil. The mixed biofuel can be used in the same applications as existing marine fuel oil without any changes to equipment specifications or operating conditions in cold climates, Idemitsu said. Mixed biofuel is able to cut 20pc of carbon dioxide compared with existing marine fuel oil. But there has been difficulty in using it in sub-zero temperatures, which results in solidification and oxidation. Idemitsu will increase use of the bio-mixed marine fuel to areas other than Hokkaido, in its effort to achieve the country's 2050 decarbonisation goal. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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