Calumet reports 2Q loss, hopeful for RD margin recovery

Market: Biofuels
09/08/24

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.

By Nathan Risser

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