German diesel imports rise despite low domestic demand
Declining Ice gasoil futures have boosted diesel imports into Germany and domestic demand for heating oil, but diesel demand continues to lag behind expectations.
The continued drop in Ice gasoil futures on 5 August, coupled with rising stocks, led to falling gasoil prices in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub. As a result, some German market participants imported more middle distillates into Germany in the first half of the week.
Diesel prices in Germany reached their lowest since the end of June 2023 on 6 August, but this did not have a major effect on the quantities of traded volumes reported to Argus. Demand from construction, logistics and agriculture is not picking up properly, according to traders, one reason being the continuing weak economic situation in Germany, which has not yet recovered from the effects of inflation, higher energy prices and global supply shortages. Persistently subdued demand from relevant sectors, along with falling prices, is leading to a significant drop in diesel refining margins, which are at their lowest since late May 2023.
In contrast to diesel, domestic heating oil demand has picked up again — traded volumes of heating oil reported to Argus increased for a sixth consecutive week. Increased buying interest resulted mainly from supply worries as a result of increasing tension in the Middle East, coupled with the sharp price decline. Unlike diesel, consumers of heating oil usually use periods of low prices to top up their tanks in time for the heating season. Hence, volumes of heating oil reported to Argus increased by 12pc compared with the previous week, while traded spot volumes for diesel fuel only increased by 2pc.
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African bitumen buyers hit by container rate hikes
African bitumen buyers hit by container rate hikes
London, 13 August (Argus) — Another big jump in container shipping rates has driven up the cost of importing bitumen to sub-Saharan Africa in recent weeks, hitting buyers that rely on packaged supplies, especially road contractors in east Africa that depend on drummed bitumen from the Middle East for paving projects. The latest surge in rates — which in many cases have shot up by at least 50pc on voyages to east, west and southern Africa compared with prevailing levels up until mid-July — is underpinned by a growing shortage of container ships globally. This has been triggered by longer east-west journey times as vessels sail around the Cape of Good Hope to avoid the risk of being attacked by Yemen's Houthi rebels in the Red Sea, a trend that shows no sign of abating. Suppliers of drummed bitumen from Iran and other Middle East exporters point to worsening delays and shortages in container shipping services at storage and trans-shipment hubs in the region, such as Jebel Ali in the UAE. The longer voyages caused by the Red Sea boycott have meant increased bunker fuel consumption and more containers on the water. International shipping lines have raised their rates for voyages from Jebel Ali to Mombasa in Kenya to $3,800/20ft container — equivalent to $190/t based on the typical number and size of bitumen drums in each container — from $2,700/container ($135/t) in mid-July. Rates to Dar es Salaam in Tanzania have jumped to $4,200/container ($210/t) from $2,800/container ($140/t) over the same period. Rates for drummed supplies shipped direct to Mombasa and Dar es Salaam by the Iranian state-owned IRISL fleet have held steady in recent months at around $1,000/container ($50/t) and $1,100/container ($55/t), respectively. Argus' latest assessment of Bandar Abbas/Jebel Ali freight rates for drummed bitumen shipments to Mombasa and Dar es Salaam is around $110/t and $125/t, respectively, up from $90-95/t in the week ending 19 July and $45/t in early December last year before the first wave of Houthi-related rate hikes . First Covid, now this Bitumen charterers say the container shipping problems have echoes of the jump in shipping rates during the Covid era. Bandar Abbas/Jebel Ali drummed bitumen rates to Mombasa and Dar es Salaam doubled from $55-60/t in May 2020 to peak at around $110/t in September 2022 before dropping back to $40-45/t in August last year ahead of the renewed spike. Market participants also point to a large increase in international container shipping rates from the Mideast Gulf to other sub-Saharan African destinations. Rates to Matadi in the Democratic Republic of Congo have reached $6,450/container ($320-325/t) this month, compared with $3,700/container ($185/t) in June. Rates to Durban in South Africa were last week indicated around $3,200/container ($160/t), up from $2,700/container ($135/t) in June, while rates to Namibian ports recently jumped to $7,000/container ($350/t) from $4,000/container ($200/t). West African markets such as Nigeria, Ghana, Cameroon and Senegal — as well as South Africa, which also supplies trucks into neighbouring southern African markets — are far less dependent than their east African counterparts on containerised flows, whether in drums, bitutainers or bags, as they are equipped with terminals that receive cargoes on heated bitumen tankers. Exporters of containerised bitumen from the Mideast Gulf or Pakistan are now finding it even more difficult to compete with bulk cargo values. Nigerian bulk tanker cargo import prices stood at $616/t on a cfr basis last week. This compares with around $600/t for Mideast drummed bitumen delivered to Apapa in Lagos. Drummed bitumen carries significant additional handling costs and other expenditure on delivery, with the solid bitumen having to be melted in specialised units before it can be supplied for road projects. By Keyvan Hedvat Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California narrows LCFS goals to tougher targets
California narrows LCFS goals to tougher targets
Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels replaced initially proposed lighter "guard rails" on crop-based credit generation. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China’s oil demand outlook weakens further: IEA
China’s oil demand outlook weakens further: IEA
The IEA issued updates to its numbers London, 13 August (Argus) — The outlook for China's oil demand growth this year has weakened further, the IEA said today. China's oil demand fell for a third consecutive month in June, with crude oil imports in July hitting their lowest since September 2022 when the country was locked down because of Covid, the Paris-based agency said in its latest Oil Market Report (OMR). China's oil demand is now forecast to grow by 300,000 b/d in 2024, compared with 410,000 b/d in last month's report and well below the 710,000 b/d the IEA had projected in January. For next year, the agency pegs growth at 330,000 b/d, "but with risks skewed to the downside." "Chinese oil demand growth has gone into reverse due to a slowdown in construction and manufacturing, rapidly accelerating deployment of vehicles powered by alternative fuels and comparison to a stronger post-reopening baseline," the IEA said. Lower Chinese consumption data feed into the IEA's narrative that the country's pre-eminence as a source of global demand growth is fading . The IEA's global oil demand growth forecast for 2024 remained unchanged at 970,000 b/d as the downgrade from China was mostly offset by better than expected gasoline consumption in the US. The agency now sees US oil demand growth at 140,000 b/d this year, compared with 70,000 b/d last month. The IEA's demand growth forecast for this year remains well below that of Opec which downgraded its forecast by 140,000 b/d to 2.11mn b/d . Opec sees Chinese oil demand growing by 700,000 b/d this year. For next year, the IEA nudged down its oil demand growth projection by 30,000 b/d to 950,000 b/d, mostly on lower forecast Chinese demand. On global oil supply, the IEA lowered its growth estimate for 2024 by 40,000 b/d to 730,000 b/d. Much bigger growth is forecast next year at 1.95mn b/d, led by gains from the US, Guyana, Canada and Brazil. In terms of supply and demand balances this year, the agency's numbers point to a slightly tighter market than previously thought. It now sees a deficit of 130,000 b/d in 2024, compared with 80,000 b/d in last month's report. The deficit in the second half is seen at 390,000 b/d. The IEA said that after four months of stock builds, global observed oil inventories fell by 26.2mn bl in June and preliminary data showed further draws in July. But the IEA points to an oversupplied market next year, particularly given a plan by some Opec+ members to unwind some of their production cuts from October. But even if those cuts remain in place, the agency says global inventories could build by 860,000 b/d in 2025. By Aydin Calik IEA oil demand and supply balance Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India’s bitumen demand to rise by 14pc in FY2024-25
India’s bitumen demand to rise by 14pc in FY2024-25
Mumbai, 13 August (Argus) — India's bitumen consumption is expected to increase by about 14pc on the year to 10mn t over April 2024-March 2025, propelled by pent-up demand from pending national highway projects and state government-linked road projects. "We have the largest road network in the world. 90pc of roads are using bituminous layers. Bitumen consumption in [the financial year] 2023-24 was 88 lakh tonnes (8.8mn t). In FY2024-25, it is expected to be 100 lakh tonnes (10mn t)," the country's transport minister Nitin Gadkari recently said in the Rajya Sabha, the upper house of parliament. But the road ministry has provisionally set a NH construction target of 10,421km for the ongoing financial year ending March 2025, according to a statement from Gadkari in the Lok Sabha, the lower house of parliament. This is down from 13,814km targeted for the previous financial year. "There may be a bit of a dent [in consumption] because of this target but it will be compensated by state [government-linked] road works and older projects, which are still ongoing, so the target does not really mean anything now. Funding is a perennial issue, but contractors are able to mitigate it and get the work done," a market participant told Argus . Many importers and dealers told Argus that state government-linked maintenance and other road projects, including those being delayed because of funding issues, would support consumption this year. Consumption from state government-linked projects was lacklustre in the last three years, but bitumen demand and imports could rise as the construction of projects accelerates, a west coast India-based importer said. "Demand is expected from states like Maharashtra, Tamil Nadu, and Andhra Pradesh because of reasons like upcoming state elections," another west coast India-based importer said. India's bitumen consumption in the calendar year 2023 rose by 10pc on the year to a record high of 8.87mn t on the back of accelerated construction of national highway projects. Pending NH projects India had set a target of building 34,800km of roads and highways by 2022 under the first phase of its flagship Bharatmala Pariyojana program, but the progress was delayed because of Covid-19 lockdowns. Of this total, about 26,400km of road construction was awarded and about 17,400km was constructed as of March 2024, according to the latest data from the transport ministry. The remaining construction is estimated to be completed by the financial year 2027-28. About 1,375 national highway projects are currently under construction, with the ministry expecting most of those to be completed during the current and the next financial year. The ministry also had a balance of about 20,000km of national highways for construction under ongoing or awarded projects at the beginning of the current financial year. By Sathya Narayanan and Chloe Choo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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