US bill may shift global bio-bunker demand to US

Market: Biofuels, Oil products
29/02/24

Global bio-bunker demand could shift to the US Gulf coast if the lawmakers pass a bill allowing ocean-going vessel operators to buy biodiesel in the US without forcing the retirement of associated renewable identification number (RIN) credits.

The bipartisan "Renewable Fuel for Ocean-Going Vessels Act", introduced this month in the US Senate, is a companion bill to legislation introduced in the US House of representatives in October 2023.

RINs are credits produced and traded by US refiners and importers to show compliance with the EPA's Renewable Fuel Standard (RFS) program. RINs currently cannot be used for RFS compliance if the corresponding physical volume of biofuel is burned outside the US.

Refiners and blenders are currently required to retire RINs from biodiesel and renewable diesel burned by ocean-going vessels operating in international waters, including the Great Lakes. The proposed bill would expand the RFS definition and allow ocean-going vessel owners to either sell the biodiesel associated RINs or purchase biodiesel at a RIN-discounted price.

If the bill becomes law, biodiesel for bunkering in the US Gulf coast would likely become cheaper than biodiesel for bunkering globally. Houston B30 bio-blend, comprised of RIN-less biodiesel and very low-sulphur fuel oil (VLSFO) would have been priced at $702/t average in February, or $59-$116/t cheaper than biodiesel blends sold in the bunkering hubs of Amsterdam-Rotterdam-Antwerp (ARA), the west Mediterranean and Singapore, Argus data showed (see chart). By comparison, the same Houston B30 blend comprised of biodiesel with the value of RINs included would have been priced at $857/t in February, a $40-$96/t premium to competing global ports.

By Stefka Wechsler

Global bio-bunker VLSFO blends, dob, Feb 2024 $/t

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

04/11/24

Construction spending up in September, asphalt weakens

Houston, 4 November (Argus) — US construction spending rose slightly in September, with spending on highways and streets higher. Still, asphalt prices declined. Total highway and street spending rose by 0.4pc in September from August to a seasonally adjusted annual rate of about $141.95bn, according to the latest data from the US Census Bureau. This was 1.5pc above September 2023 levels. Despite the increase in highway spending, wholesale asphalt prices in the US midcontinent hit a four-year low for September on excess supply and subdued demand. Midcontinent railed asphalt prices dropped by $45/st for September delivery to $290-$320/st from August. Waterborne prices in the region saw a similar, $45/st decrease to $300-$335/st. The sharp decline stemmed from turnaround activity beginning in late August at BP's 435,000 b/d Whiting, Indiana, refinery which boosted supplies as adverse weather in the southeastern US stifled wholesale demand. The National Weather Service reported above-average precipitation from Louisiana to Virginia in September with Tennessee seeing its fourth wettest September on record. Hurricane activity in early July and late September also impacted demand for the month with construction firms reporting lower third quarter product shipments because of extreme weather conditions. Total spending was up 7.3pc through the first nine months of 2024 compared to the same period in 2023. Private construction spending was supported by residential investment while nonresidential spending fell. Manufacturing spending fell while commercial spending rebounded from August, reversing previous month's trends. Spending on water supply continues to grow. By Aaron May and Cobin Eggers US Construction Spending $mn 24-Sep 24-Aug +/-% 23-Sep +/-% Total Spending 2,148,805.0 2,146,048.0 0.1 2,055,216.0 4.6 Total Private 1,653,624.0 1,653,160.0 0.0 1,592,388.0 3.8 Private Residential 913,632.0 912,186.0 0.2 877,629.0 4.1 Private Manufacturing 234,302.0 234,803.0 -0.2 194,941.0 20.2 Private Commerical 119,191.0 118,927.0 0.2 139,861.0 -14.8 Total Public 495,182.0 492,888.0 0.5 462,829.0 7.0 Public Water/Sewage 76,805.0 76,462.0 0.4 69,634.0 10.3 Public Highway/Road 141,049.0 140,349.0 0.5 138,694.0 1.7 US Census Bureau Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

Saudi Luberef’s profit down on year in Jan-Sept

04/11/24

News

04/11/24

Saudi Luberef’s profit down on year in Jan-Sept

Singapore, 4 November (Argus) — State-controlled Saudi Aramco's base oil subsidiary Luberef posted a significant decrease in profit in January-September as a result of lower margins. Profit in January-September dropped by 38pc from the previous year to 764mn Saudi riyals ($203mn), although revenue rose by 6.5pc on the year to SR7.4bn. This is because base oil and by-products margins decreased. Luberef's base oil sales volumes in the first nine months of this year were up 1pc to 929,000t as compared with 918,000t in the same period last year. Luberef's profit in the third quarter was down by 34pc on the year to SR226mn, against a 2pc on the year drop in revenue to SR2.5bn. Argus -assessed Asian fob Group I and II base oil export prices were largely lower over the third quarter, especially for light grades, while heavy-grade prices were relatively supported because of tighter supply. The Yanbu "Growth II" expansion project is expected to completed at the end of 2025, the company said. This will bring the base oil production capacity at the Yanbu facility to around 1.3mn t/y. Luberef is also studying a project to produce Group III/III+ base oils, which is at the pre-front end engineering design stage. By Chng Li Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

October a record month for AOM Ucome trading

01/11/24

News

01/11/24

October a record month for AOM Ucome trading

London, 1 November (Argus) — Used cooking oil methyl ester (Ucome) had its strongest month yet on the Argus Open Markets (AOM) deal initiation platform in October, with 107,000t changing hands. Ucome activity more than quadrupled on the month after only 26,000t traded in September. Ucome traded in October made up 19.6pc of total Ucome volumes traded in 2024 so far. For all three products combined — RME, Ucome, and Fame 0 — October 2024 was the most active month of trading since August 2023, and before that, July 2022. RME trade totalled 145,000t, a 150pc increase from September, and 104,000t of Fame 0 changed hands, a 108pc increase. In total, 356,000t of biodiesel was traded in October, up from 134,000t in September and 143,000t in August. The rise in activity aligned with the start of the new quarter and some major news for the market. At the end of September, Germany proposed a draft bill that would prevent excess greenhouse gas (GHG) quota tickets from being carried into 2025 and 2026. GHG quota tickets are the compliance mechanism for the GHG reduction mandate that governs biofuels usage, and the market is heavily oversupplied at the moment, pressuring down prices and encouraging companies to buy and use tickets rather than physical biofuels. By starting from scratch for 2025, participants except demand to pick up substantially, although until the end of 2024 tickets will remain the cheaper option. The immediate response to the announcement of the draft bill in Germany was a surge of activity in the related paper markets for the fourth quarter, a final piece encouraging physical trading. As of the last day of the October contract, open interest stood at 1,742 lots for Ucome, 1,167 lots for Fame 0, and 2,472 lots for RME. Total open interest for the fourth quarter was 4,655 lots for Ucome, 4,396 lots for Fame 0, and 7,529 lots for RME, according to Ice data. Many companies with strong paper positions will manage exposure by trading some portion of the total volume in the spot market. The Dutch government confirmed that the country's ticket carry-over levels will be reduced, which should also increase biofuels demand next year. Biofuels mandates throughout Europe go up at the start of the new year, along with the introduction of ReFuel mandates for aviation and shipping. This all combines for a much more positive outlook for 2025 demand than the market expected, as well as stronger competition for supply. The increase in trading started a quarter ahead, as companies look to take advantage of the changes, prepare for 2025, and still cover any shorts until the end of this year. European producers have been struggling with low production margins, which has slowed down production levels. European supply has tightened because of this and imports are down because of provisional anti-dumping duties on China, which may have also encouraged some companies into the window to find product. In the macroeconomic environment, volatility in energy markets following increased tensions in the Middle East also prompted some trading, as the Ice gasoil contract underpins European biodiesel prices and has closely followed military developments. Some participants reported an overall higher risk appetite for the fourth quarter after several months of very subdued market activity. By Simone Burgin Monthly AOM trade volumes t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Lyondell Houston refinery closure to begin in January

01/11/24

News

01/11/24

Lyondell Houston refinery closure to begin in January

Houston, 1 November (Argus) — LyondellBasell's 264,000 b/d Houston, Texas, refinery will begin shutting units in January and complete its previously-announced exit from the crude refining business by the end of the first quarter 2025. The Houston plant will shut a crude distillation unit (CDU) and coking unit in January followed by a secondary CDU, coking unit and the refinery's fluid catalytic cracking unit (FCC) in February, the company said in an earnings presentation today. The February unit shutdowns will include the closure of "ancillary units", LyondellBasell said. The company today re-iterated its time line of exiting the refining business by the end of the first quarter and continues to evaluate an advanced recycling or renewable fuels conversion at the plant. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US biofuel feedstock use dips in August

31/10/24

News

31/10/24

US biofuel feedstock use dips in August

New York, 31 October (Argus) — Renewable feedstock usage in the US was down slightly in August but still near all-time highs, even as biomass-based diesel production capacity slipped. There were nearly 3.5bn lbs of renewable feedstocks sent to biodiesel, renewable diesel, and sustainable aviation fuel production in August this year, up from fewer than 3bn lbs a year prior, according to the US Energy Information Administration's (EIA) latest Monthly Biofuels Capacity and Feedstocks Update report. August consumption was 0.4pc below levels in July and 0.5pc below record-high levels in June. US soybean oil consumption for biofuels rose to 39.3mn lbs/d in August, up by 2.1pc from a year earlier on a per-pound basis and up 6.9pc from a month prior. The increase was entirely attributable to increased usage for renewable diesel production, with the feedstock's use for biodiesel slipping slightly from July. Canola oil consumption for biofuels hit 14.2mn lbs/d, up by 58.1pc from a year prior on a per-bound basis but still 19.4pc below record-high levels in July. Distillers corn oil usage, typically less volatile month-to-month than other feedstocks, bucked that trend to hit a high for the year of 13.6mn lbs/d in August. That monthly consumption is up 13.6pc from a year earlier and 20.9pc from a month earlier. Among waste feedstocks, usage of yellow grease, which includes used cooking oil, rose to 22.4mn lbs/d in August, up 13.8pc from levels a year prior and 5.8pc from levels in July. Tallow consumption for biofuels was at 18.6 mn lbs/d over the month, an increase of 27.8pc from August last year but a decrease of 13.4pc from July this year. Production capacity of renewable diesel and similar biofuels — including renewable heating oil, renewable jet fuel, renewable naphtha, and renewable gasoline — was at 4.6bn USG/yr in August, according to EIA. That total is 24.1pc higher than a year earlier and flat from July levels. US biodiesel production capacity meanwhile declined to fewer than 2bn USG/yr over the month, down by 4.3pc from a year earlier and 1.3pc from a month earlier. US biomass-based diesel production capacity has expanded considerably in recent years, but refiners have recently confronted challenging economics as ample supply of fuels used to comply with government programs has helped depress the prices of environmental credits and hurt margins. The industry is also bracing for changes to federal policy given this year's election and a new clean fuel tax credit set to kick off in January. That credit, known as "45Z", will offer a greater subsidy to fuels that produce fewer greenhouse gas emissions, likely encouraging refiners to source more waste feedstocks over vegetable oils. That dynamic is already shaping feedstock usage this year, with Phillips 66 executives saying this week that the company's renewable fuels refinery in California is currently running more higher carbon-intensity feedstocks ahead of a shift to using more waste early next year. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more