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Advanced Fame marine biodiesel blends hit 9-month low

  • Spanish Market: Biofuels, Oil products
  • 18/09/24

Some marine biodiesel blend prices in northwest Europe hit a year-to-date low on 17 September, owing to soft fundamentals and easing values in underlying markets.

Argus assessed the prices of B30 and B100 Advanced fatty acid methyl ester (Fame) 0 dob ARA — which include a deduction of the value of Dutch renewable fuel tickets (HBE-G) — at $674.01/t and $993.87/t, respectively. At these levels, the two blends were at their lowest outright price since 29 December last year — right before values rose sharply following the halving of the Dutch HBE-G multiplier for maritime blending at the start of the year.

Prices have slipped on the back lacklustre demand for marine biodiesel blends in recent months. The price of EU Emissions Trading System (ETS) allowances, for which Advanced Fame marine biodiesel blends receive a zero emission factor, have averaged $70.56/t so far this year, compared with $93.43/t in the same period last year. Consequently, the expansion of EU ETS into the shipping sector has done little to financially incentivise the uptake of marine biodiesel blends this year.

On the other hand, voluntary demand for marine biodiesel blends has been steady from shipowners seeking to deliver proof of sustainability (PoS) documentation to their customers to offset the latter's scope 3 emissions. But this may have shifted geographically in recent months in favour of Singapore over ARA.

Soft fundamentals in the marine biodiesel blend market has been compounded by pressure on prices in underlying crude and biodiesel markets. The front-month Ice Brent crude futures and gasoil futures contracts hit a near three-year low at 16:30 BST on 10 September. This in turn weighed on values of very-low sulphur fuel oil (VLSFO) and marine gasoil (MGO), and the former makes up 70pc of the B30 Advanced Fame dob ARA blend.

VLSFO dob ARA prices have averaged $505.58/t so far in September, compared with $533.38/t on 1-18 August, having hit $483/t on 10 September, the lowest level since August 2021.

Meanwhile, in the underlying biodiesel market, Advanced Fame 0 fob ARA prices were at the second-lowest level on record on 17 September, with the price marked at parity to used cooking oil methyl ester (Ucome) for the first time.

Several market participants have said that low prices for German greenhouse gas (GHG) quota tickets, which can be traded on the market to meet the country's emissions reduction mandate, have discouraged buyers from physically blending advanced biodiesel, as tickets are a cheaper option. The current year GHG other ticket price hit a new historic low of $85/t CO2 equivalent (CO2e) on 13 September, down by $115/t compared with the same time last year and by $378/t compared with two years ago.

Provisional EU anti-dumping duties on Chinese-origin biodiesel that came into force on 16 August have also turned European buyers away from advanced product made in China, which used to be one of the main sources of advanced biodiesel in Europe.


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08/11/24

Carbon intensity reg pivotal to biobunkers in 2025

Carbon intensity reg pivotal to biobunkers in 2025

New York, 8 November (Argus) — The International Maritime Organization's (IMO) carbon intensity indicator (CII) regulation will propel biofuel bunker demand in 2025 as its restrictions tighten. The CII regulation came into force in January 2023 and thus far has had a muted effect on shipowners' biofuel bunker demand. But 2025 could be a pivotal year. CII requires vessels over 5,000 gross tonnes (gt) to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. The scoring levels are lowered yearly by about 2pc, so a vessel with no change in CII could drop from from C to D in one year. If a vessel receives a D score three years in a row or E score the previous year, the vessel owner must submit a corrective action plan. The IMO has not established penalties or restrictions for vessels scoring D. Thus, theoretically a ship owner could have scored D in 2023 and 2024 with no consequences. Year 2025 will mark CII's third year, when ship owners whose vessels were scoring D in 2023 and 2024 will need to rethink their sustainability approach or risk getting D again and having to produce corrective actions plans in 2026. That is in addition to the ship owners whose vessels will score E in 2024. To improve its CII score, a ship owner could reduce its speed and burn low-carbon fuels, among other solutions. Biofuel is the only plug-and-play low-carbon fuel option that does not require a costly vessel retrofitting. in 2023 of the vessels 5,000 gt and over, 3,931 scored D, 1,541 scored E and 3,967 did not report scores, according to the latest IMO data ( see chart ). Assuming that the non-responders refrained from reporting to avoid sharing their low D and E scores, then the total number of D and E scoring vessels could be as high as 9,439, or 33pc of the total vessel count. The bulk of the vessels reporting D and E were dry bulk carriers at 1,853 and 641, respectively, followed by oil tankers at 743 and 349, respectively, according to IMO data. The dry bulk carrier category also had the highest number of non-responders at 1,015 vessels. The vessel classification society American Bureau of Shipping concluded that a reference case container vessel with 154,000t deadweight could see its rating improve from D to C in 2025 if it switched from burning conventional marine fuel to B25 biofuel. FuelEU, EU ETS: All bark, no bite Separately from the CII regulation, ship owners traveling in, out and within EU territorial waters will see the implementation of a new FuelEU marine regulation on 1 January and the tightening of the existing EU ETS regulation. But neither would be major driving forces behind biofuel for bunkering demand in 2025. The EU ETS will require that vessel operators pay for 70pc of their CO2 emissions next year. But even with the added cost of CO2, a B30 biofuel blend is more expensive than conventional marine fuel. In Rotterdam in October, B30 — comprised of 30pc used cooking oil methyl ester (Ucome) and 70pc very low-sulphur fuel oil (VLSFO) — with a 70pc CO2 cost added would have averaged $924/t, compared with VLSFO with added 70pc CO2 cost at $682/t, according to Argus data. In order for the EU ETS to entice ship owners to burn biofuels, at current VLSFO and Ucome prices, the price of CO2 has to rise up to $300/t. And CO2 has fluctuated from $55-$102.5/t from January 2023 to October 2024. Starting on 1 January 2025, the EU's FuelEU regulation will require that vessel fleets' lifecycle greenhouse gas intensity is capped at 89.34 grams of CO2-equivalent per megajoule (gCO2e/MJ) through 2029. For vessels which do not meet this cap, a low biofuel blend can meet the requirement. A B5 blend, comprised of 5pc Ucome and 95pc VLSFO, emits less than 89 gCO2/MJ. At this rate, albeit higher, demand for biofuels would not spike dramatically. Unlike the CII scores which apply to individual vessels, FuelEU applies to vessel pools. Different shipping companies are allowed to pool their vessels together to share compliance and meet the EU ETS emissions limits. Thus several biofuel or LNG burning vessels can compensate for the emissions generated by the majority of the older, less fuel efficient vessels burning conventional marine fuel in the pool. By Stefka Wechsler CII vessels rating Number of vessels (5,000 GT and over) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Canada climate plans not equally at risk post-Trudeau


08/11/24
08/11/24

Canada climate plans not equally at risk post-Trudeau

Toronto, 8 November (Argus) — Canada's climate policies will be overhauled if prime minister Justin Trudeau loses an upcoming federal election, but the Conservative Party might not move to roll back all of the programs. Trudeau over nine years in office has pushed through a raft of carbon pricing policies, cracked down on provinces with insufficiently ambitious plans, and even started a global "challenge" to spur more jurisdictions to price emissions. But Canada's policies have exacerbated cost-of-living concerns at a time when voters across the world are punishing incumbents for inflation, and Conservative leader Pierre Poilievre has barnstormed the country with a pledge to "axe the tax." An election must happen no later than October 2025, and the ruling Liberals are down significantly in polls. "We are going to see change, significant change," said Lisa DeMarco, a senior partner at the law firm Resilient and a member of the International Emissions Trading Association board at the Canada Clean Fuels and Carbon Markets Summit in Toronto, Ontario, this week. What "axe the tax" might mean in practice is uncertain. Inevitable targets are the country's federal fuel charge, currently at C$80/t ($57.54/t) and set to gradually increase to C$170/t in 2030, and a recently proposed greenhouse gas emissions cap-and-trade program for upstream oil and gas producers. But other policies, especially those with industry support, could remain. The country's distinct system for taxing industrial emissions, which includes a federal output-based pricing system that functions as a performance standard, "will likely be untouched," said former Conservative leader Erin O'Toole. A point of debate at the conference was what Poilievre might do with the country's clean fuel regulations, which function similarly to California's long-running low-carbon fuel standard and have boosted biofuel usage in the country. The policy is "certainly not at the top of the list" of Conservative priorities, said Andy Brosnan, president of low-carbon fuels at environmental products marketer Anew Climate. But that does not mean it will escape scrutiny. Conservatives could tinker with the program or push through more muscular changes like excluding electric vehicles, said David Beaudoin, chief executive of the climate consultancy NEL-i. "We should expect that regulation will be maybe not dismantled but somehow changed, perhaps fundamentally," Beaudoin said. In the gap left by the federal government, provinces could make up the difference with their own climate programs, panelists agreed. Quebec for instance has a linked carbon market with California, and British Columbia has its own low-carbon fuel standard. But policymakers should heed the lessons of Trudeau's declining popularity and reorient how they approach climate policy, O'Toole argued. "Try to be minimally disruptive on economically vulnerable citizens," he said. "Try not to pit industry against industry or region of the country against region." By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Talks to restart as port of Vancouver lockout drags


08/11/24
08/11/24

Talks to restart as port of Vancouver lockout drags

Calgary, 8 November (Argus) — A labour disruption at the port of Vancouver is now into its fifth day, but the employers association and the locked-out union are to meet this weekend to try to strike a deal and get commodities moving again. Workers belonging to the International Longshore and Warehouse Union (ILWU) Local 514 on Canada's west coast have been locked out by the BC Maritime Employers Association (BCMEA) since 4 November. This came hours after the union implemented an overtime ban for its 730 ship and dock foreman members. The two sides will meet on 9 November evening with the assistance of the Federal Mediation and Conciliation Service (FMCS) in an effort to end a 19-month long dispute as they negotiate a new collective agreement to replace the one that expired in March 2023. The FMCS was already recruited for meetings in October, but that did not culminate in a deal. Natural resource-rich Canada is dependent on smooth operations at the port of Vancouver to reach international markets. The port is a major conduit for many dry and liquid bulk cargoes, including lumber, wood pellets and pulp, grains and agriculture products, caustic soda and sodium chlorate, sugar, coal, potash, sulphur, copper concentrates, zinc and lead concentrate, diesel and renewable diesel liquids and petroleum products. These account for about two-thirds of the movements through the port. Grain operations and the Westshore coal terminal are unaffected while most petroleum products also continue to move, the Port of Vancouver said on 7 November. As the parties head back to the bargaining table, the ILWU Local 514 meanwhile filed a complaint against the BCMEA on 7 November, alleging bargaining in bad faith, making threats, intimidation and coercion. "The BCMEA is trying to undermine the union by attempting to turn members against its democratically-elected leadership and bargaining committee, said ILWU Local 514 president Frank Morena on 7 November. "They know their bully tactics won't work with our members but their true goal is to bully the federal government into intervention." But that is just "another meritless claim," according to the BCMEA, who wants to restore supply chain operations as quickly as possible. The union said BC ports would still be operating if the BCMEA did not overreact with a lockout. "They are responsible for goods not being shipped to and from BC ports — not the union," Morena says. The ILWU Local 514 was found to have bargained in bad faith itself already, according to a decision by the Canada Industrial Relations Board (CIRB) in October. Billions of dollars of trade are at risk with many goods and commodities at a standstill at Vancouver, which is Canada's busiest port. A 13-day strike by ILWU longshore workers in July 2023 disrupted C$10bn ($7.3bn) worth of goods and commodities, especially those reliant on container ships, before an agreement was met. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Fund woes to hit Australian post-winter bitumen imports


08/11/24
08/11/24

Fund woes to hit Australian post-winter bitumen imports

Singapore, 8 November (Argus) — Australia's bitumen import demand following its June-August winter is anticipated to fall by about 20pc on the year because of prolonged funding issues and a lack of big paving projects, market participants told Argus . Australia continues to be plagued by budget and funding issues, with the country still reeling from the effects of the Covid-19 pandemic. Less funding has been allocated to road maintenance works this year and most of the local councils have decided to spend their budgets on other key sectors such as healthcare. Funding levels have overall been on a downtrend since 2020, market participants added. Although demand has risen since mid-October compared to the previous months this year, consumption levels remain unchanged from the same period in the last year as most projects are small and revolve around filling potholes, market participants said. Bitumen consumption is expected to be around 10-20pc lower on the year in 2024, the participants added, with some noting that the situation is unlikely to improve for at least two more years because of higher inflationary pressures in the country. Most importers in Australia currently have enough inventory to last until January 2025 and are not looking to procure spot cargoes on top of their term import commitments, and small volumes can be procured from the local suppliers if required, they said. Roads in Australia are set to get a maintenance boost, especially in parts such as southern Australia, according to the minister for regional development, local government and territories, but market participants argued that what "road projects" encompass has changed over the years and now includes other elements of maintenance such as grass cutting, construction of safety barriers and traffic lights, which do not involve road paving or bitumen. Of the entire budget allocated by the government, only around a third or less goes to road maintenance and paving works, Australia-based importers said. There was also a dip in demand from western Australia as authorities delayed pricing contracts for paving projects because of budgeting constraints. Australia imported around 488,874t of bitumen from January-August, according to Australian Petroleum Statistics data, compared to 605,283t from January-August 2023. Bitumen imports totalled around 932,286t in the whole of 2023, up from 915,467t in 2022. New Zealand demand to rise Conversely, New Zealand's import demand is expected to rise on the back of firm domestic consumption. Market participants in New Zealand said post-winter consumption and sales could be 3-4pc higher than the same time in 2023, which was already a record year for some importers. Importers noted the country is well on track to bringing in about 160,000-170,000t of bitumen this year. The weather has also been dry, making it conducive for road construction works. With the clear weather expected to carry on into summer, which falls between December and February, market participants said they are using this year-end period to stock up on inventory levels before the Christmas break in December. Most companies are likely to see a slowdown in road works by mid-December as contractors will leave for year-end breaks. It is important to buy enough supplies for the new year, said market participants, as February and March are usually the peak paving months for New Zealand. New Zealand imported about 54,000t in the first half of this year, compared to 144,220t during the same period last year, according to GTT data. The region imported 180,576t last year, compared to 200,615t in 2022. By Chloe Choo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hungary’s Mol cuts forecast for 2024 refinery runs


08/11/24
08/11/24

Hungary’s Mol cuts forecast for 2024 refinery runs

Budapest, 8 November (Argus) — Hungarian integrated oil firm Mol has revised down its 2024 forecast for crude runs at its two landlocked refineries after a "turnaround-heavy" third quarter, it said today. The company expects to refine around 11.5mn t of crude combined at the 161,000 b/d Szazhalombatta plant in Hungary and the 115,000 b/d Bratislava complex in Slovakia this year, down from its previous guidance of about 12mn t. The two refineries processed 8.25mn t of crude in January-September, down from 9.09mn t a year earlier. Their combined crude throughput was down by 11pc on the year at 2.81mn t in the third quarter. Mol carried out scheduled maintenance at Szazhalombatta between 26 July and 19 September and expects to complete maintenance work on petrochemical units at Bratislava in the first half of November. Crude intake at Mol's third refinery, the 90,000 b/d Rijeka plant on Croatia's Adriatic coast, rose by 2.6pc on the year to 802,000t in the third quarter and was largely unchanged year-on-year at 1.26mn t in January-September. The company's crude throughput forecast only includes the Hungarian and Slovakian refineries. Mol cut the share of imported crude in its overall slate to 3.35mn t, or 93pc, in the third quarter from 3.8mn t, or 97pc, a year earlier, while it almost doubled intake from its own crude production to 255,000t in July-September from 129,000t in the same period last year. Szazhalombatta and Bratislava mostly process Russian crude received through the Druzhba pipeline system under an EU oil ban waiver, while Rijeka mainly takes non-Russian seaborne crude. The profitability of Mol's refining business was hit by a 71pc year-on-year fall in its refinery margin indicator — calculated based on the Dated Brent crude benchmark — to just $3.70/bl in July-September. Its oil product sales fell by 4.2pc from a year earlier to 4.88mn t in the third quarter. This included 1.52mn t of products Mol had to buy from third parties to complement its own output and satisfy demand, a significant rise from 1.25mn t of third-party oil products it sold a year earlier. The firm's upstream oil and gas production rose by 11pc on the year to 96,100 b/d of oil equivalent (boe/d) in the July-September quarter. It has raised its full-year forecast to about 92,000-94,000 boe/d from previous guidance of around 90,000 boe/d. Mol's profit fell to 111.5bn forint ($295mn) in the third quarter from Ft175.8bn a year earlier. By Béla Fincziczki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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