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Pilot fears rail crisis will cut US DEF, biofuel supply

  • Market: Biofuels, Fertilizers, Oil products, Petrochemicals, Petroleum coke
  • 28/04/22

Refined products retailer Pilot Travel Centers fears a move to cut rail traffic by western US railroad Union Pacific (UP) will drive a shortage of diesel exhaust fluid (DEF) and ethanol in the US.

UP this month ordered Pilot to cut rail shipments by 50pc or face embargoes on shipments of DEF — an important solution used to cut NOx emissions from diesel engines without hurting fuel efficiency — as well as ethanol, biodiesel and renewable diesel, Pilot chief executive Shameek Konar told the US Surface Transportation Board (STB) yesterday .

UP's "restrictions will prevent Pilot from keeping many markets adequately supplied with DEF, likely causing shortages that will sideline trucks and reduce trucking capacity," Konar said on the second of STB's two-day hearing on the rail service crisis.

Pilot has not cut volumes so far but UP also hasn't implemented an embargo. But Konar said he worries about the effect on Pilot and the trucking industry.

UP this month told some of its largest shippers that it will start limiting their rail volume if the carrier is unable to clear railcar congestion from its system.

UP told Pilot one day this month it had shipped about 160 cars during the prior week and wanted the shipper to reduce that by about 46 cars/week, or 6 cars/day.

"We have not reduced the cars because we would be in deep trouble," he said, adding that UP has not responded. Each railcar of DEF translates to about 5mn miles of trucking.

"If you lose 100mn USG of DEF, it would be absolutely catastrophic because we do not just supply ourselves," Konar said. He estimated the cuts would equate to removing 10pc of the trucks on the road today.

Pilot estimates it supplies 30pc of the DEF in the US. The company provides more than 300mn USG of DEF to the trucking industry annually, with about 74pc of that shipped by rail. Pilot also provides roughly 20pc of the nation's highway diesel, renewable diesel and biodiesel.

Cutting Pilot's renewable diesel volume, with about 50pc being shipped by rail, would increase fuel prices in certain states and potentially dry up supply, he said.

Cutting ethanol shipments from Pilot's plant in Nebraska to Arizona, Nevada and a few other regions is also expected to remove the amount of ethanol available to blend with gasoline, potentially raising prices.


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14/02/25

Lack of tariff details worry US energy markets

Lack of tariff details worry US energy markets

Washington, 14 February (Argus) — Uncertainty over potential tariffs on US imports from Canada and Mexico is already roiling North American energy trade, as trading desks struggle to understand how tariffs would be assessed and some buyers are unwilling to commit to taking March cargoes without more details. US president Donald Trump's planned 10pc tariff on energy commodity imports from Canada and a 25pc import tax on Mexican energy was originally set for 4 February but he postponed implementation until 4 March. The three governments are negotiating to avert a full-blown trade war, and many market participants are hoping that Trump would again delay their implementation after winning some concessions, as he did earlier this month. But even without tariffs in place, vast segments of the energy industry — oil and gas producers, refiners, pipeline operators, traders — are bracing for them. Energy trade across North America has been tariff-free for decades. Trump during his first term terminated the 1994 North America Free Trade Agreement, but replaced it with the US-Mexico-Canada trade agreement in 2020 that kept the energy trade terms unchanged. The sudden imposition of tariffs after decades of free trade could create legal uncertainty in contractual obligations related to the payment of tariffs and reporting requirements, law firm Vinson & Elkins partner Jason Fleischer told Argus . "It's been a long time since oil and gas pipelines have really had to deal with anything quite like this." At least one large Canadian refiner attempted to pass along the tariff to gasoline cargo buyers in the US ahead of the original 4 February start date, leading a few buyers to threaten to pull out of their contracts, market sources told Argus . Complicating the matter is the approach taken by the Trump administration to impose import taxes differs greatly from current trade terms. The regular US customs duties on crude, for example, are currently set in volumetric terms, at 5.25¢/bl and 10.5¢/bl depending on crude quality. In practice, nearly every source of US crude imports is exempt from tariffs at present. But the import tax set out in Trump's executive orders is to be imposed on the value of the commodity — without specifying how that will be calculated and at what specific point during the transportation process. Likewise, guidance on the new tariffs from the US Customs and Border Patrol (CBP), given just before the original 4 February deadline, did not address the specific issues relating to the energy commodities. CBP and the Treasury Department will have to issue regulations spelling out specific details on how tariffs are to be assessed and collected, Vinson & Elkins partner Jeff Jakubiak said. "The advice we're giving to companies is to collect information and get ready to provide it to the government at some point in the future," Jakubiak said. If tariffs go into effect, "there is likely to be a combination of reporting obligations by the transporter as well as the owner of the commodity. And in both cases, my advice is, figure out how you can accurately count and assign volumes that are moving across the border and figure out how you would price those." Market effects also uncertain The uncertainty over the timing and details of implementation of tariffs have left the affected market participants having to guess who will carry the burden of new taxes. The discount for Western Canadian Select (WCS) crude at Hardisty, Alberta, to the CMA Nymex WTI contract widened on the eve of the initial 4 February deadline of tariffs, suggesting that market participants expected Canadian producers to bear the brunt of tariffs. But over time, that burden likely will shift depending on individual market power of buyers and sellers. This could hit refiners in the US midcontinent that currently rely on WCS and have few alternatives to taking Canadian crude. They could, in turn, pass on the additional costs to consumers at the pump. US independent refiner PBF Energy said this week that tariffs would likely cut US midcon refinery runs , even if those refiners could find alternatives to Canadian crudes. Most Mexico-sourced crude markets are seaborne, giving producers in that country an alternative to US markets. "For this scenario, we anticipate [US Gulf coast] refiners will reduce consumption to the lower limit of their contractual obligations but will continue to purchase Mexican crude and pay the tariff via reduced refining margins," investment bank Macquarie said in a recent note to clients. Canadian producers also expressed concern about the uncertain impact of tariffs on crude volumes trans-shipped through the US, either for exports to third country destinations from Gulf coast ports or transported on US pipelines to destinations in eastern Canada. Without guidance from the US customs authorities, it is not clear if such flows would be subject to new US tariffs. Integrated oil sands producer Suncor's refineries on the Canadian east coast rely on crude flows from Enbridge's 540,000 b/d Line 5 or 500,000 b/d Line 78 that cross into the US in Michigan before crossing back into Canada. "I would say that I don't know that anyone on the planet knows exactly what's going to happen on tariffs," chief executive Rich Kruger said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Biomethanol-methanol diff widens, UK demand ticks up


14/02/25
News
14/02/25

Biomethanol-methanol diff widens, UK demand ticks up

London, 14 February (Argus) — The spread between biomethanol and conventional methanol is the highest in more than nine months, at $734/t. This is partly driven by falling European methanol prices, with the methanol fob Rotterdam barge quote hitting $348.97/t on 12 February, the lowest since 7 August. Increased imports from the US, and the restart of a 900,000 t/yr capacity European plant have put downward pressure on prices. Biomethanol values ticked higher in recent sessions, tracking gains in the wider biofuels complex after record low values for renewable fuel tickets — tradeable credits generated primarily by the sale of biofuel-blended fuels — in major European demand centres in 2024. European demand for biofuels in 2025 could be supported by a combination of higher mandates for the use of renewables in transport, and by changes to regulations on the carryover of renewable fuels tickets in Germany and in the Netherlands . UK biomethanol prices and demand rise In the UK, the Argus cif biomethanol price has averaged $1,110/t so far in February, a $22/t increase from January and a $60/t rise from the September 2024 average, when prices hit a record low. The price averaged around $1,094/t in February last year. Prices have been in part supported by stronger renewable fuel ticket prices (RTFCs) in the UK recently, according to market participants. UK 2025 non-crop RTFCs averaged 25.45p in the first quarter of 2025 so far, an increase of 1.88p when compared with the previous quarter. Demand picked up in the UK and the wider European market, including from voluntary sectors, at the beginning of the year, participants said. Biomethanol is used as a gasoline blending component in the UK. Consumption in the country in 2024 rose by 45pc on the year but was lower by 7.9pc than in 2022 at 58mn litres, according to the third provisional release of the 2024 Renewable Transport Fuel Obligation statistics. The Argus biomethanol fob Amsterdam-Rotterdam-Antwerp (ARA) netback quote was $1,083/t on 12 February. FuelEU fuels demand The January rollout of the FuelEU Maritime regulations could increase demand for biomethanol in shipping. Ship operators traveling in to, out of and within EU territorial waters must reduce their greenhouse gas (GHG) intensity on a lifecycle basis by 2pc. The reduction rises to 6pc from 2030 and gradually reaches 80pc by 2050. Shipping companies can choose from a range of alternative marine fuels to reduce their emissions. Only dedicated ships can run on methanol alone, but many companies, including Maersk , have ordered dual-fuel vessels that can run on methanol and traditional bunker fuels, along with biofuel blends like B24 — a mix of very-low sulphur fuel oil (VLSFO) and used cooking oil methyl ester (Ucome) biodiesel. International offtake agreements for renewable methanol are also on the rise. Maersk has signed several letters of intent for procurement of biomethanol and e-methanol from producers including Equinor , Proman and OCI Global , and has an agreement with Danish shipping and logistics company Goldwind for 500,000 t/yr from 2024. Biomethanol and e-methanol are likely to be the most competitive and scalable pathways to decarbonisation this decade, Maersk said . While relatively small, Maersk's 'green marine' fuel consumption, which includes biomethanol, increased by 38pc in 2024 to 3,034 GWh. Singaporean container shipping group X-Press Feeders said it will buy biomethanol from OCI's Texas plant starting from 2024. Biomethanol bunker sales in the port of Rotterdam dropped by more than half in the fourth quarter of 2024 compared with the third quarter, to 930t, but sales were 86pc higher than those in the fourth quarter of 2023, according to Port of Rotterdam data . UDB risk to biomethanol imports The European Commission's proposal to exclude automatic certification of biomethane and biomethane-based fuels from the Union Database for Biofuels, if relying on natural gas that has been transported through grids outside the EU, has been slowing some negotiations for 2025 biomethanol imports — particularly from the US — according to market participants. Industry bodies have expressed concerns about implementation of the database, particularly that it will impede the bloc's biomethane development. Burdensome fees, overly strict deadlines, risk of double counting, and a significantly increased number of participants required to enter data will slow market growth, said the European Compost Network and the European Waste Management Association. They recommend mandatory use of the UDB be postponed until 1 January 2026 "at the earliest". By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Republic Services finishes Indiana sorting center build


14/02/25
News
14/02/25

Republic Services finishes Indiana sorting center build

Houston, 13 February (Argus) — US-based materials recovery facility operator and hauler Republic Services has finished construction on its second polymer center in Indianapolis, with initial income from the plant expected in the second half of the year, the company said in its earnings call. Republic Service's polymer centers are secondary sorting facilities that produce recycled polyethylene terephthalate flake and color sort high-density polyethylene and polypropylene waste to sell to reprocessors. Republic Services faced some challenges in the third quarter and fourth quarter of 2024 with startup costs for equipment and getting specifications correct for customers at its operational polymer center in Las Vegas, but after those initial hurdles, the company was "feeling good" about them, chief executive John Vander Ark said. The company's prior assumptions about production in Las Vegas in terms of selling price, costs, volume sold, and the willingness of customers to pay were really "strong" and "positive," he added. Republic Services finished construction on its Las Vegas polymer center in December 2023. The polymer centers are strategically located next to joint venture Blue Polymers' facilities. Republic Services plans to provide feedstocks to Blue Polymers in order to produce pelletized and compounded recycled resin. Blue Polymers is expected to finish construction on its first plant in Indianapolis in mid-2025, Republic Services said. Republic Services aims to spend $75mn on new polymer centers in 2025. By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US reciprocal tariffs could hit Brazilian ethanol


13/02/25
News
13/02/25

US reciprocal tariffs could hit Brazilian ethanol

New York, 13 February (Argus) — Brazil's growing ethanol industry is a likely target for "reciprocal" US tariffs that President Donald Trump plans to impose on products from countries that he says discriminate against US imports. In announcing the plan Thursday to raise US import tariffs to the same level foreign countries charge on US exports, Trump did not specify which countries and products would face the new levies. But a White House fact sheet specifically mentions Brazil's treatment of US ethanol as an unfair practice worth addressing. "The US tariff on ethanol is a mere 2.5pc. Yet Brazil charges the US ethanol exports a tariff of 18pc," the White House said. The US produces more ethanol than any other country, almost all derived from corn. Brazil, the world's second largest ethanol producer, largely uses sugarcane as a feedstock but has a fast-growing corn ethanol industry, too. The disparity in tariff rates has long frustrated US producers, who have become reliant on export markets since ethanol's growth in the US is limited by rising vehicle fuel efficiency, electric vehicle adoption and regulatory constraints on higher blends. The US exported more than 1.9bn USG of ethanol last year according to the Renewable Fuels Association, an all-time high. Renewable Fuels Association general counsel Ed Hubbard told Argus last week that his organization raised the issue of Brazilian tariffs with Trump transition staffers, and the office of senator Chuck Grassley (R-Iowa) said he discussed the same at a recent meeting with Jamieson Greer, Trump's nominee to be US trade representative. Greer said at a recent Senate hearing that Brazil's tariff on US ethanol was among his top priorities. Federal agencies are planning to review trade disparities and report back by 1 April, potentially giving countries like Brazil some time to consider policy changes that might avoid tariffs. Hubbard said he sees the threat of tariffs as a tool to bring Brazil back to the negotiating table on reducing its own restrictions, potentially allowing more US ethanol to enter the country and meet increasingly ambitious national targets for biofuel adoption. At the same time, Brazil could negotiate for changes to US trade barriers, such as a tariff rate quota system for sugar imports and a new 25pc tariff on steel and aluminum imports. If the US does ultimately increase taxes on Brazilian ethanol, trade flows might not change much in the near term. Ethanol trade between the two countries has already dropped off significantly, and the US is oversupplied with renewable fuels used to meet federal blend mandates. While essentially all foreign ethanol in the US is from Brazil, the US imported less fuel ethanol in 2024 than in at least 30 years. But new tariffs would hurt LanzaJet, a US biofuel producer with a plant that imports Brazilian ethanol and refines it into sustainable aviation fuel (SAF). While the company says it can and does use other feedstocks, federal and state clean fuel programs treat Brazilian sugarcane ethanol as lower-carbon. LanzaJet thus earns larger subsidies for producing fuel from sugarcane ethanol than if it used more corn ethanol, which is generally too carbon-intensive to qualify for a new US biofuel tax credit. "Tariffs impacting nascent industries like SAF will undoubtedly hurt the United States' potential to continue to lead in this space — limiting our ability to import necessary resources and export our own for the global market, given aviation is a global industry," LanzaJet vice president for corporate affairs Meg Whitty said. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Upper Mississippi River ice tops 5-year average


13/02/25
News
13/02/25

Upper Mississippi River ice tops 5-year average

Houston, 13 February (Argus) — Ice measurements taken Wednesday to gauge when barges can transit the upper Mississippi River exceeded the five-year average, according to the US Army Corps of Engineers (Corps). The annual Lake Pepin ice reports — taken by the Corps in February and March at Lake Pepin south of Minneapolis — are a bellwether for when barge transit can resume on the upper Mississippi River. This year's first report found ice at the lake was 19in thick on 12 February, 8in thicker than last year's measurement and 3in above the five-year average. The Corps' initial report last year found only 11in of ice at the lake, thin enough for waterborne traffic to break through. Subsequent reports were cancelled after the Corps said it would be too hazardous for crews and equipment to take additional measurements. Locks along the upper Mississippi River are anticipated to remain closed through 3 March, the Rock Island Corps district in Illinois said on 5 February. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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