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CN fertilizer rail traffic fluid amid disruptions

  • : Agriculture, Biofuels, Coal, Coking coal, Crude oil, Feedgrade minerals, Fertilizers, LPG, Metals, Oil products, Petrochemicals, Petroleum coke
  • 20/03/24

Fertilizer shipments remain a priority for railroad Canadian National (CN) despite recent disruptions.

"The railroad is still moving, still humming and it is business as usual crossing the [Canada-US] border," CN senior vice president – rail centric supply chain James Cairns told Argus. "Our network is very fluid."

CN fertilizer and potash volume in the first quarter is up by 10pc compared with a year earlier, Cairns said.

CN expects that first quarter volume of potash will rise to one of the top three first quarters in the last decade.

"We are very keenly aware that keeping people fed is very, very important," Cairns said. "So, the application fertilizers, moving potash — we are keenly aware that we have a responsibility to keep those products moving."

Shippers remain concerned about disruptions by the coronavirus, particularly any effects on cross-border traffic between Canada and the US. The border is closed to retail and resident traffic, but rail operations have been allowed to continue and remain fluid.

CN is "a long way from having to make priority decisions," Cairns said. The railroad has excess capacity and could handle "a fairly significant uptick in demand if that was to come about," he said.

CN expects that some volume may shrink because of the coronavirus, such as crude and gas products. But any decline will free up resources that can be used elsewhere in the system.

Disruption to Canadian rail distribution would have limited impact on the US potash market in the short term but could have substantial impact on export markets for potash and sulfur.

US fertilizer distribution networks are well-covered for spring potash demand, with stocks elevated after a lackluster fall application. Disruption to rail distribution would likely not cause widespread shortages, as the greater risk to supply is from a lack of truck drivers. However, US sulfur markets are tight amid lower refinery run-rates, and a reduction in sulfur supply from Canada would exacerbate that.

Shipments by rail to west coast Canada and US ports are critical for Canadian potash and sulfur producers. Approximately 12mn metric tonnes/yr of MOP and sulfur is exported to non-US destinations by sea, most of which reaches the ports by rail.

Improved railroad operations are driving the volume growth and fluidity, Cairns said. CN is benefiting from significant capital investments it made in western Canada during the last few years.

The improvements have allowed the railroad to recover faster from system disruptions, including recent protests that blocked CN's main rail line connecting eastern Canada to the west and US midcontinent.

CN is in constant communication with customers, and so far demand has been steady, Cairns said.

"We really are focused on ‘is there going to be a lag in demand related to production as opposed to overall market demand?' And we have not seen it yet," he said.

There have been a few changes as some customers reduced shifts or split labor into two teams to limit virus exposure. Aside from that, business has been "pretty robust."


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25/02/04

Chinese UCO fate sealed long before tariffs

Chinese UCO fate sealed long before tariffs

New York, 4 February (Argus) — Broad US tariffs on Chinese imports that took effect today may reshuffle trade flows between the world's two largest economies, but demand for the once-pivotal US biofuel feedstock Chinese used cooking oil (UCO) was already waning. China exported 2.7bn lbs of UCO into the US over the first 11 months of 2024, more than any other foreign supplier, up from 1.6bn lbs in 2023 and just 100,000 lbs in 2022, according to US customs data. Clean fuel standards in states like California, Oregon, and Washington, along with a federal tax credit that rewards biofuels that produce fewer greenhouse gas emissions, spurred refiners to look beyond domestic supply and import low-carbon wastes from abroad. The US' new 10pc tariffs on Chinese imports could discourage further imports, since US refiners have a range of feedstock options for renewable diesel and sustainable aviation fuel (SAF) production. The US trade representative did not immediately confirm the tariff rate for UCO, but there was already an 8pc tariff on UCO from all origins and an additional 7.5pc tariff on China-origin UCO before even factoring in the new surcharge on all imports. Both countries have also recently taken steps to curb Chinese UCO exports, making further growth in UCO trade less likely, even if tariffs go away. China late last year cancelled a 13pc export tax rebate for UCO, reducing a key incentive to send the feedstock abroad at a time when the country is aiming to use more SAF domestically. The administration of former president Joe Biden then took steps to cut off US demand, closing off opportunities for fuels derived from foreign UCO from claiming a tax credit crucial for production margins. That incentive, known as "45Z," offers increasingly generous subsidies to fuels as they produce fewer emissions, which was initially expected to benefit refiners sourcing UCO over first-generation crop feedstocks. But the new government emissions model that road fuel producers must use to claim the credit for now offers no pathway for fuels derived from foreign UCO. The US Treasury Department justified the restriction by saying it had "significant concerns" about distinguishing imported UCO from palm oil, which is ineligible for 45Z. The guidance is only preliminary, meaning President Donald Trump will have the final say on how the government enforces rules around the credit. But the new administration is likelier to pursue even more sweeping restrictions on foreign feedstocks, which Republican lawmakers have argued are hurting demand for US crops that can also be refined into fuel. Republicans could use budget legislation this year to change the credit too, and key lawmakers on the House tax-writing committee have already floated potential restrictions on foreign feedstocks. There are some caveats to US biofuel markets that mean UCO imports will not entirely go away absent more muscular trade restrictions. US biofuel producers with foreign UCO on hand can still sell into state low-carbon fuel standard markets like California, which have not restricted the feedstock. And the current guidance around 45Z allows producers of SAF — but not road fuels — to use an alternative lifecycle emissions model known as CORSIA, which does not restrict any sources of UCO. Valero senior vice president Eric Fisher said last week on an earnings call that the current restrictions on road fuels derived from foreign UCO claiming 45Z would not affect Diamond Green Diesel, the refiner's joint renewable fuels venture with Darling Ingredients. Foreign UCO has "always" been directed to meet SAF demand in Europe and the UK, Fisher said, and the recent guidance "does not really change what we were going to do strategically with that feedstock." Europe and the UK have 2pc SAF mandates starting this year, though requirements do not become significantly more stringent until 2030. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexican peso volatility persists despite tariff delay


25/02/04
25/02/04

Mexican peso volatility persists despite tariff delay

Mexico City, 4 February (Argus) — The Mexican peso remains volatile despite a bump from the last-minute deal postponing US President Donald Trump's threatened 25pc tariffs on Mexican imports, financial analysts said. The US agreed Monday to delay the tariffs for one month after discussions between Trump and Mexican President Claudia Sheinbaum. In return, Mexico pledged to deploy 10,000 National Guard troops to its northern border to combat drug trafficking, with a focus on fentanyl. The peso initially reacted positively to the news, strengthening by nearly 3pc late Monday after the agreement was announced. Still, today the Mexican peso weakened 0.4pc to Ps20.5 to the dollar by the end of trading, according to data from Mexico's Central Bank (Banxico). The peso has depreciated 16.6pc against the dollar from a year ago, according to Banxico data. The currency will remain volatile until there is greater clarity on whether tariffs will ultimately be imposed and at what level, BBVA Mexico bank analysts said in a note. If the US proceeds with a 25pc tariff, the peso could weaken to Ps24/$1, pushing Mexico's economy into a 1.5pc contraction this year, according to the bank. A lower 10pc tariff would be more manageable, BBVA Mexico added, as peso depreciation would offset some cost increases for US importers. In that scenario, Mexico's economy could still grow by 1pc in 2025. "Markets have debated whether to take Trump's policy promises seriously but not literally, or both seriously and literally," Barclays analysts wrote in a note to investors. Barclays also noted that the US sees itself as having the upper hand in any trade war, as a far greater share of Canadian and Mexican exports depend on US demand than vice versa. Mexico's state-owned oil company Pemex typically benefits from peso depreciation because of its US dollar-denominated crude exports, which help offset higher fuel import costs. "Pemex's revenues are tied to international oil prices, providing a natural hedge," the company said in its latest earnings report. However, analysts warned that Pemex's shift toward domestic refining over exports could reduce this buffer, leaving the company more vulnerable to foreign exchange swings, particularly as it carries a large dollar-denominated debt load. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Engie converts Chile diesel plant to renewables


25/02/04
25/02/04

Engie converts Chile diesel plant to renewables

Santiago, 4 February (Argus) — French utility Engie has started commercial operations at its 68MW Tamaya battery energy storage system (BESS) on the site of its former diesel-fired power plant near Tocopilla in northern Chile's Antofagasta region. BESS Tamaya will store electricity generated by the 114MW Tamaya photovoltaic (PV) plant on the same site, which began operations in February 2022. The company is "repurposing the site to give it a second life and continue contributing to the local economy," said Engie Chile chief executive Rosaline Corinthien. BESS Tamaya consists of 152 lithium battery containers with a storage capacity of 418MWh. It will be able to supply 50,800 homes over five hours of peak demand. Engie is also constructing the 116MW Tocopilla BESS operation at its former Tocopilla coal and fuel oil-fired power complex in the same region. It disconnected the complex from the grid in September 2023. Engie is the fourth-largest generator in Chile with 2.6GW of installed capacity. Its BESS portfolio consists of 2GWh in operation and construction. The conversion of fossil fuel-fired plants is part of Chile's decarbonization plan to ensure a "just" energy transition, providing new sustainable economic activity for communities. Since 2019, Chile has withdrawn 11 coal plants for a combined 1.7GW and is committed to closing the remaining 17 coal plants by 2040. By Emily Russell Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tariffs not only US threat to Canada canola oil


25/02/04
25/02/04

Tariffs not only US threat to Canada canola oil

New York, 4 February (Argus) — Canadian canola farmers have reason to celebrate a last-minute deal to at least delay US tariffs. Changing US biofuel policies, however, could dim their excitement. The two countries agreed Monday to pause for a month 25pc tariffs on most Canadian imports, including agricultural products like canola oil. While best known for its use in food, canola oil has become an increasingly important ingredient in US biofuel production. Canada exported 800,000 lbs of crude canola oil to the US in 2021, before US regulators allowed more canola-based fuels to qualify for a biofuel mandate, but more than three times that total over just 11 months in 2024 according to customs data. Canola oil from all origins made up around 12pc of the US biomass-based diesel feedstock mix last year. The challenge for Canada is that policies in the US that helped cement canola oil's role in biofuel production are increasingly encouraging producers to use other feedstocks. The mere threat of tariffs could speed that trend along. A long-running US tax credit for blenders of biomass-based diesel expired last year and was replaced by the Inflation Reduction Act's "45Z" credit, which requires fuels to meet an initial carbon intensity threshold and then ups the subsidy as emissions fall. This shift was always expected to benefit waste feedstocks over crops, which incur a carbon penalty for land changes and fertilizer use. The clear message to refiners — both from the US government and from California regulators that run the state's influential low-carbon fuel standard — has been to diversify beyond vegetable oils. But an updated emissions model released by the Department of Energy last month surprised some in the industry by assessing the default carbon intensity of canola-based fuels as too high to automatically qualify for 45Z. Although fuels from soybean oil generally earn some credit, diesels made from canola oil could go from earning $1/USG last year to nothing this year. Before even factoring in potential tariffs, Canadian canola oil appears less attractive for refiners than even competing crops. Guidance on 45Z is preliminary , meaning canola crushers can push for final rules that are less restrictive. But energy lobbyists say privately that they do not expect the new administration to act with urgency to implement an incentive created by Democratic lawmakers and oriented around climate change. And many Republicans' concern with the credit is not that it is too harsh on canola — but that it is too permissive of foreign feedstocks they see as hurting US crop demand. The introduction of 45Z could simultaneously leave Canadian biofuel producers less able to backfill canola oil demand if US buyers look elsewhere. The credit can only be claimed by US producers, cutting off subsidies for imported fuels. At the same time, 45Z does not require fuel to be consumed stateside — meaning that US biorefineries can send subsidized fuel abroad to chase additional incentives Canada offers for biofuel usage. "The on-again off-again status of US tariffs and Canada's counter-tariff response do not alter the bare economics of biofuel production between jurisdictions when one has an exportable tax credit and the other does not," said Fred Ghatala, president of Advanced Biofuels Canada. The future of renewable diesel production in Canada, previously expected to grow significantly to the benefit of farmers, is in doubt. ExxonMobil's Canadian subsidiary is on track to open a 20,000 b/d renewable diesel plant this year, but other companies collectively representing more production capacity are wavering. Plans for an integrated canola crush and 15,000 b/d renewable diesel facility in Saskatchewan were paused last month. And it is unclear if Braya Renewable Fuels' 18,000 b/d biorefinery in Newfoundland is running now or if Tidewater Renewables' 3,000 b/d British Columbia plant will run after March. If demand from Canadian biorefineries remains limited, some traders expect that Trump's tariff threats could divert more canola oil previously bound for the US to Europe . But there is no perfect alternative to the US market, which accounted for 91pc of all Canadian canola oil exports in 2023 according to the US Department of Agriculture. "There is logistics capacity to sell canola oil, seed, or meal abroad. That's certainly an option," said Chris Vervaet, executive director of the Canadian Oilseed Processors Association. "The best option though is to continue to maintain and grow our trade relationship with our most important trade partner, which is the United States." By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Baghdad, Erbil take steps to restart Kurdish oil flows


25/02/04
25/02/04

Baghdad, Erbil take steps to restart Kurdish oil flows

Dubai, 4 February (Argus) — Iraq's oil ministry has officially asked the Kurdistan Regional Government (KRG) to start delivering oil to state marketer Somo as part of a deal reached between Baghdad and Erbil to restart north Iraqi crude oil exports through the Turkish Mediterranean port of Ceyhan. "The Turkish and Iraqi governments are taking the steps to prepare the Iraq-Turkey pipeline [ITP] to export crude through the port of Ceyhan," Iraq's oil minister Hayan Abdulghani told state news agency INA. He said that no less than 300,000 b/d of the Iraqi semi-autonomous Kurdish region's crude will be exported once the pipeline is back in operation. "The debts owed by the Kurdistan region are being agreed upon between the two parties," he added. Abdulghani did not provide an official date for the resumption of exports. Iraq's oil ministry has been approached for comment. But his remarks signal that a restart of the country's northern crude is close, made possible by Iraq's parliament approving a key budget amendment on 2 February that will see oil companies operating in the semi-autonomous Kurdish region get $16/bl for their production and transportation costs , double the previous rate. As part of the amendment, an international consulting firm will be tasked with auditing Kurdish production and transportation costs over a 60-day period. Iraq's federal oil ministry and its KRG counterpart will co-ordinate on appointing the auditor but if they fail to reach agreement, the Iraqi government will make the selection unilaterally. Opec+ commitments Disagreement between Baghdad and the KRG over commercial terms has prevented the resumption of Kurdish crude exports have yet to resume from Ceyhan after the pipeline linking the port with oil fields in northern Iraq was closed by Turkey in March 2023. The closure followed an international arbitration ruling that said Turkey had breached a bilateral agreement with Iraq by allowing KRG crude to be exported without Baghdad's consent. While the resumption of oil flows via Ceyhan should give the Iraqi oil ministry more visibility on how much crude is being produced in the Kurdistan region, Baghdad may still find itself in a dilemma as regards its Opec+ commitments. Iraq has been the biggest overproducer in Opec+ for over a year, and officials there have said a lack of visibility about output from the northern region has complicated its efforts to comply. Baghdad will now have to balance its own production alongside that of Erbil, while ensuring it adheres to its Opec+ quota and its compensation commitments. Opec+ has come under pressure as US President Donald Trump recently called for the producer group to "bring down the cost of oil". But so far, Opec+ has not heeded those calls with its key ministerial panel agreeing on 3 February to keep its policy as is, meaning it would not see any production returned to market until at least April. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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