Sheinbaum leads in Mexico election to follow AMLO

Spanish Market: Crude oil, Fertilizers, Metals, Natural gas, Oil products
03/06/24

Ruling party candidate Claudia Sheinbaum was winning Mexico's presidential election by a wide margin today, according to preliminary results, after a race in which she committed to continue President Andres Manuel Lopez Obrador's state-centric energy policies.

Sheinbaum with the Morena party was ahead with 59pc of the vote as of 12am ET on Monday after Sunday's election, according to early results from the national electoral institute (INE), based on less than 7pc of the total votes. She was followed by Xochitl Galvez from a right-left (PRI-PAN-PRD) coalition with 29pc, and Jorge Alvarez Maynez from left-centrist Movimiento Ciudadano with 9pc.

The former mayor of Mexico City and climate scientist vowed during the campaign to boost renewable energy, but also to keep state-owned companies at the center of the market. Lopez Obrador, known as AMLO, had started rolling back then-recent openings for private-sector energy investment when he took office in 2018.

The Morena party began celebrating Sheinbaum's victory, but the opposition had yet to concede the race as of midnight.

Sheinbaum's party and allies are also leading the congressional race, according to preliminary results. Sheinbaum's Morena and allies were ahead with around 55pc of the 500 seats in the lower house, with 35pc for the PRI-PAN-PRD coalition and 10pc for Movimiento Ciudadano.

Morena and allies also were winning a majortiy of the 128 seats in the upper house with similar figures, preliminary results from the INE show.

More detailed results are expected in the coming days, once more than 50pc of the votes are counted.

With Sheinbaum at the forefront of polls for months, the Morena party focused on securing majorities in both houses of congress. But the incumbent party could fall short of the 66.67pc of both houses needed to implement broad constitutional reforms.

Instead, Sheinbaum is expected to continue with Lopez Obrador's energy sovereignty policies and strengthening oil company Pemex and power utility CFE through financial support rather than eliminating the 2014 energy reform from the constitution.

Sheinbaum — who will become Mexico's first female president and the first in North America — has vowed to continue supporting Pemex and CFE, limiting private-sector investment despite the companies' limited financial capacities.

She has indicated during the campaign that there will still be no auctions of areas for oil exploration after the Lopez Obrador government halted these.

In downstream, Sheinbaum has expressed support for major Pemex's refining projects such as two under-construction cokers and the start-up of the long-delayed 340,000 b/d Olmeca refinery, in line with Lopez Obrador's goal to cut fuel imports.

Mexico's government poured around $4bn into maintenance alone at Pemex's aging refineries during the Lopez Obrador administration, in addition to $6bn-$8bn for the uncompleted cokers and a spiraling $16bn-$20bn for the Olmeca refinery.

Pemex's refining system increased its crude processing by 53pc to 975,500 b/d in January-April, up from 639,000 b/d in the same period of 2018 prior to the start of Lopez Obrador's administration.

Mexico also held governor elections in nine states, including Mexico City, but the preliminary results were not yet available.

The country experienced its largest election with nearly 20,000 posts up for election, but also its most violent in modern times with 30 candidates killed.

The next president will take office on 1 October for six years and the new congress will be sworn in on 1 September.

By Antonio Gozain

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14/11/24

Cop: German opposition pushes for Article 6

Berlin, 14 November (Argus) — Germany's main opposition parties have welcomed the progress achieved on Article 6 of the Paris Agreement in at the UN Cop 29 climate summit in Baku, Azerbaijan. They have called on Germany and the EU to make better use of the instrument to allow for more cost-efficient climate action. Germany's dominant opposition party, the right-of-centre CDU/CSU, on 14 November commended the framework under Article 6 as an efficient way of reducing greenhouse gas (GHG) emissions. Article 6 of the Paris accord aims to help set rules on global carbon trade. The Article 6 mechanism allows for reductions to happen where they are quickest, cheapest and easiest to be carried out, the CDU head of the working group on climate action and energy, Andreas Jung, said in a debate in the lower house of parliament, the Bundestag. The deputy head of the FDP faction Lukas Koehler, also speaking in the Bundestag on 14 November, called on Germany and the EU to "finally" integrate the Article 6 in their climate action plans. Koehler argued that if for instance Germany's progress in emissions reduction should turn out to be too slow, the country could temporarily shift its efforts — and the associated finance — to where more rapid mitigation might be achieved, such as Brazil. The EU, of which Germany is a member state, will not make use of Article 6 credits, at least until 2030, to reach its so-called nationally determined contribution (NDC) – its climate action pledge — under the Paris climate accord. The EU has been seeing progress on ongoing Article 6 negotiations at Cop 29, the European Commission's principal advisor for international aspects of EU climate policy Jacob Werksman said today, "mostly because parties are now agreeing with the EU and others that were concerned about the transparency and accountability of the bilateral markets that operate under Article 6.2". Werksman believes there is enough momentum for negotiations to be concluded next week, noting that the atmosphere has "improved" compared with previous negotiations, which echoes the sentiment expressed by a number of negotiators earlier this week . Werksman pointed in particular to the US now agreeing with others and helping to broker compromises. Koehler also warned German government representatives in Baku to refrain from "expensive" pledges which may strain the country's budget. Developed countries agreed in 2009 to deliver $100bn/yr in climate finance to developing nations, and Cop 29 is focused on the next iteration of this — the new collective quantified goal (NCQG) . In a statement, Germany — represented by Scholz despite his absence at the Cop — and other G7 members like Canada, France, or the Netherlands agreed that "developed countries must continue to take the lead and live up to existing finance commitments". Germany faces early elections as the government lost its majority last week following the sacking, by chancellor Olaf Scholz of the Social Democrat SPD, of finance minister Christian Lindner of the pro-business FDP party and the FDP's subsequent withdrawal from the ruling coalition. Polls suggest that the CDU/CSU group will easily win the next federal elections which are scheduled to take place on 23 February. The FDP's persistent refusal to allow Germany to take on more debt to enable more public funding, including of clean technologies, was the main reason for Lindner's sacking. By Chloe Jardine and Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Advanced Fame ARA marine biodiesel blends hit 2024 lows

14/11/24

Advanced Fame ARA marine biodiesel blends hit 2024 lows

London, 14 November (Argus) — Marine biodiesel blends comprising Advanced Fatty acid methyl ester (Fame) 0 hit their lowest prices so far this year on 13 November, according to Argus assessments. Calculated B30 Advanced Fame 0 dob ARA prices fell by $15.05/t to $654.79/t, the lowest since 14 December 2023. Calculated B100 Advanced Fame 0 dob ARA values tumbled by $70.60/t to $922.79/t, their lowest since 29 December 2023. The calculated dob ARA range prices incorporate a deduction for HBE-Gs. These are a class of Dutch renewable fuels units, or HBEs, used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty/energy tax on fuels. The sharp drop in blend values came despite firming prices in Advanced Fame 0 fob ARA range values, which rose by $11.50/t to $1,481.25/t on 13 November — their highest since 8 July. Fossil markets also rebounded from recent drops that day, with front-month Ice Brent crude futures and gasoil futures contracts edging higher by 16:30 BST. Market participants had pointed to sluggish demand for European marine biodiesel blends in recent sessions, which may have added pressure on Advanced Fame 0 blend prices. HBE-G values have soared, weighing on the blend values for which it is accounted as a deduction. Prices for 2024 HBE-Gs had almost doubled on the month at €18.75-18.95/GJ by 13 November, up from €9.70-9.90/GJ four weeks prior. Market participants attributed the increase in 2024 prices to recent gains in European hydrotreated vegetable oil (HVO) prices, tight supply because of a decline in tickets from biofuels used in shipping and less overall biofuel blending in the fourth quarter. HBE-Gs surpassed the like-for-like cost physical blending of HVO class IV by 13 November, albeit marginally, which could encourage physical blending. But high demand in a tightly supplied market in the Netherlands is continuing to drive HVO prices higher. The supply tightness is the result of a combination of fewer imports, with provisional anti-dumping duties in place on Chinese volumes, and some production problems. Italy's Eni confirmed on 7 November that it has halted output at its Gela HVO unit on Sicily, for planned maintenance. Finnish producer Neste said it stopped production at its plant in Rotterdam because of a fire on 8 November. France's TotalEnergies said that the shutdown of unspecified units at its La Mede plant would result in flaring on 8 November. By Hussein Al-Khalisy and Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LAT Nitrogen halts sales to Germany on high gas costs

14/11/24

LAT Nitrogen halts sales to Germany on high gas costs

London, 14 November (Argus) — Major European producer LAT Nitrogen has withdrawn from the German market today owing to a surge in gas costs. LAT Nitrogen produces nitrogen-based products for the fertilizer and industrial chemical markets. It sells CAN, ASN and NPK 15-15-15 to the German market. "We will closely monitor the development of gas prices before considering a return to the market," LAT Nitrogen market intelligence and demand planning analyst Harald Lindner said. Front-month natural gas prices on the Dutch TTF have climbed steadily over the past two months, reaching more than €45/MWh today, up by €10/MWh from September. CAN is a key nitrogen fertilizer used in the German market and spot prices have stagnated at about €280/t bulk cif inland and have failed to grow ahead of the season, despite higher list prices. Yara raised its CAN asking price on 16 October to €305/t bulk cif inland for delivery to Germany and the Benelux countries, up from its previous offer of €295/t bulk cif inland. Buying interest from farmers has been incredibly slow ahead of spring applications this year. Market coverage in Germany for nitrogen fertilizers for the 2024-25 fertilizer year is estimated to be 40-45pc, down from an average of 60-65pc by mid-November. Weak grain prices, reduced farm incomes and warehouses full of unsold agricultural produce are also said to be behind the lack of demand for fertilizers from consumers. Some wholesalers are expecting sales to remain slow until the start of 2025, which will give distributors logistical challenges to deliver product ahead of early spring applications. LAT Nitrogen began maintenance in mid-September on some of the lines at its Linz site in Austria, affecting downstream fertilizer output of ammonia, nitric acid, CAN and NPKs. This was due to be finished by early November. The Linz site is a major source of fertilizers for central and eastern Europe, with CAN 27 annual production roughly at or above 600,000t in typical recent years, according to latest IFA data. The 429,000 t/yr prilled urea plant at Linz was unaffected by the maintenance and is running as normal. By Suzie Skipper Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Guyana hires floating generators to avert outages

14/11/24

Guyana hires floating generators to avert outages

Kingston, 14 November (Argus) — Guyana is lifting its floating power capacity to 111MW with the rental of plants that the government says will prevent widespread power cuts over the next two years. The government has contracted a 75MW power barge from Turkish firm Karpowership that installed a 36MW barge in May, finance minister Ashni Singh said on Wednesday. The government has not released the terms of the contracts for the floating plants that are being fired by imported heavy fuel oil. Karpowership has been given a two-year contract that the government says will expire with the scheduled commissioning of a $2bn natural gas project that includes a 300MW power plant. The project will be fed by gas from a deepwater block being worked by US major ExxonMobil. The agreements with Karpowership "will take us just beyond the period when the new plant comes on stream," Guyana's vice president Bharrat Jagdeo said. The growing oil producer in northern South America faces a widening power deficit as state power utility GPL cannot meet demand created by a rapidly expanding oil-fired economy, the government said. Power demand in the country of 750,000 people has grown from 115MW in 2020 to 175MW currently and is projected to reach 205MW by year-end, the government said. GPL's fuel oil-fired output of 165MW "does not allow for a comfortable reserve so we need adequate redundant capacity," an official told Argus . Guyana's contract for power barges from Karpowership is the company's third in the region. Six of the company's floating plants are supporting Cuba's faltering power system, while another is stationed in the Dominican Republic. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

European urea market braces for CBAM impact in 2026

14/11/24

European urea market braces for CBAM impact in 2026

London, 14 November (Argus) — European producers and traders of urea are preparing for the phase-in of the EU's Carbon Border Adjustment Mechanism (CBAM) in early 2026. While EU producers expect their market share to rise, questions about the implementation, pricing, and oversight remain, leading to uncertainty among agricultural urea traders. The European AdBlue market is also weighing the possible impact. Under CBAM, which was passed by the EU in May 2023, urea importers will have to buy certificates to cover the carbon emitted during production wherever the plant is located. In the UK, the government confirmed its CBAM application on fertilizers and other commodities from 1 January 2027. CBAM is aimed at creating a level playing field for imports to the EU and the UK, while nudging non-EU countries towards climate action. European producers of urea currently have to contend with lower margins because their production cost is higher than that of non-EU manufacturers since the introduction of the EU Emissions Trading System (EU ETS). European producers are therefore at a disadvantage. The transition period in the EU for CBAM began on 31 October and will last until 31 January 2026. During this time, urea importers must provide quarterly reports on their imports and the carbon emitted during production. In February 2026, the phase-in for CBAM will begin. After that point, importers must buy enough CBAM certificates to cover at least 80pc of embedded carbon each quarter. Urea imports will therefore become more expensive in 2026. The exact increase in fertilizer prices, including urea, will depend on the cost of CBAM certificates, which in turn will be based on the weekly average price for EU ETS allowances. EU ETS certificates are currently priced at €66/t CO2 but are due to rise in the future. Calculating an exact price for CBAM certificates is difficult, Argus was told by affected parties. But estimates range anywhere from average indications of €10-20/t or even up to €80-100/t for imported urea. Higher prices will inevitably be passed on to the end-user. However, if one assumes that CBAM will add €10-20/t on the price of agricultural grade urea, then the estimates suggest that the cost of a loaf of bread will rise by €0.10-0.50, which is negligible, a European fertilizer wholesaler suggested. Given the uncertainty of CBAM's effect on pricing, some suppliers are cautious about trading too far into the future. Agricultural buyers purchase product in advance of the key application seasons, but importers often attempt to time purchasing around dips in international prices. European producers welcome CBAM European urea producers have welcomed the introduction of CBAM. They have sold automotive grade urea (AGU) at a premium to imports for several years, and as a result, they have lost market share. Norwegian fertilizer producer Yara said in its third-quarter results that it plans to only progress projects with the highest returns and concrete potential margins, driven by firm regulatory changes like the EU ETS and CBAM. The ETS and CBAM policies are likely to lift urea prices in Europe , and this would trigger increased nitrate fertilizer and NPK margins for Yara, if upgraded from low-carbon ammonia, according to the producer. Some traders expect AGU imports to fall with the phase-in of CBAM, and domestic producers' market shares to increase again. However, the European market relies on imports for both agricultural and automotive grade urea so heavily that a lasting, significant drop in imports seems unlikely, analysts said. "Fertilizer import quantities, including agricultural grade urea, will not be negatively affected by CBAM as importers will absorb the new costs, as those that are subject to duties have done so previously," a German trader said. There is, for example, not nearly enough prilled or granular urea production in Europe to cover demand, making imports impossible to avoid. In 2023, the EU 27 imported just over 5mn t of urea from just the top three non-EU suppliers — Egypt, Algeria and Russia — with an additional 6.3mn t from both within the EU and outside. Urea imports in January-August 2024 were 7.2mn t, down by 8pc from 7.8mn t in the first eight months of 2023. During this period imports from Egypt, Russia and Algeria accounted for almost 51pc. Furthermore, European urea traders have expressed concerns that it may be difficult for authorities to check carbon emissions at plants outside the EU, and that potential loopholes could allow foreign product to enter the market at discounted rates. There are also questions surrounding how the EU will regulate issuing CBAM certificates. Importers will not have to buy CBAM certificates, for example, if the producer has already paid a carbon price in the country of origin. Impact on AGU and Europe's AdBlue market The European AdBlue market might also feel the effects of the CBAM. AdBlue is produced by mixing AGU with deionised water. While most AdBlue in Europe is produced by primary producers using domestic urea, there are an increasing number of so-called diluters, which import competitively priced urea, and then offer AdBlue at a discount. If the price gap between domestic and foreign urea is closed, diluters might be forced to increase their prices as well. AdBlue traders in Germany and the Netherlands suggest that a narrowing price gap between these secondary producers and primary ones could affect the former's market share. The market share has been growing steadily in the past few years. That growth might be halted or even partially reversed once CBAM comes into effect. According to Argus calculations, AGU consumption in Europe will continue to rise until 2027, in line with the projected growth in AdBlue demand ( see graph ). AGU imports, similarly, are expected to grow until 2029, peaking at about 85,000 t/yr. By Natalie Müller and Suzie Skipper Projected growth in Europe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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