German heating oil sales drop as prices rise
Traded heating oil volumes in Germany dropped sharply in the week ending 16 August after a first price rise since early July.
Although prices only increased by €0.70/100l on the week, heating oil spot sales submitted to Argus fell by 40pc.
Ice gasoil futures have been rising since 7 August as Europe-wide demand for heating oil picks up towards the end of summer. Diesel demand in the Amsterdam-Rotterdam-Antwerp (ARA) hub has been increasing as some German importers reduced stocks as a result of short-term price-driven demand in the week to 9 August.
Import demand along the Rhine river decreased compared with the week prior, but fuel imports remain slightly elevated. Some traders are concerned about a drop in Rhine water levels in September, so are using the lower prices to replenish their stocks. Ship owners report a consistently higher utilisation in August than in July.
The key factor for price movements of middle distillates in recent weeks was the Ice gasoil futures contract, which has fallen by almost $100/t since the beginning of July. German average heating oil prices fell by almost €6/100l during the same period. The price drop promoted a steadily increasing spot demand for heating oil, as consumers usually replenish stocks at a time of low prices.
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Massive Canadian rail disruptions move closer
Massive Canadian rail disruptions move closer
Washington, 19 August (Argus) — A Canadian rail workers union and two major Canadian railroads moved closer to a disruptive nationwide strike on 22 August, with the union issuing on Sunday a 3-day strike notice to Canadian Pacific Kansas City (CPKC) and fellow railroad Canadian National (CN) telling the union it will lock employees out that same day. A strike by workers from the Teamsters Canada Rail Conference would cause widespread disruptions to commodity deliveries across North America. The major carriers last week began to embargo shipments of hazardous materials between the US and Canada. Canadian National expects to issue new embargoes today. Its shutdown plan began last Monday. "Unfortunately, we have no choice but to keep moving forward with this plan which means that by Thursday morning, no goods will be moving on the railroad," the railroad said. CPKC similarly began to implement shutdown plans last week. Tomorrow it will begin embargoing all shipments originating in Canada and all US shipments headed to Canada. Contracts between the Teamsters and each railroad expired at the end of last year. Employees have continued to work under those agreements but that is nearing an end as the parties remain far apart on many issues including pay and work hours. The union and railroads' strategies differ. The Teamsters so far have only issued a strike notice at one carrier. Contract negotiations are occurring separately with each railroad. "The only reason we served strike notice at [Canadian Pacific Kansas City] is because the company was set to cancel our expired collective agreements," the union said. "This would have created a situation where our members had no rights or protections at work." The union claimed CPKC is pressuring it for concession that would make it " harder for workers to predict when they might be called for work, creating a fatigue-related safety risk." The union also said the carrier was trying to change work rules related to being held away from home, and undermining Canada Labour Code provisions. CPKC in turn told the Teamsters it will lock out employees on 22 August unless the two parties are able to come to either a negotiated agreement or agree to binding arbitration. The Teamsters said late Sunday that, at that time, it did not intend to issue a strike against Canadian National. But Canadian National said it will lock employees out "unless an agreement or binding arbitration is achieved" before before 12:01am ET on 22 August. "Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart," Canadian National said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Algeria offers Lebanon fuel lifeline for power plants
Algeria offers Lebanon fuel lifeline for power plants
Dubai, 19 August (Argus) — Algeria said it will supply Lebanon with fuel for its power plants after the last operational unit was forced to shut down, leaving the country without electricity. But the initiative is at a preliminary stage and the full details are still to be thrashed out, sources said. Algerian president Abdelmadjid Tebboune commissioned the prime minister to inform his Lebanese counterpart of a decision to "immediately supply Lebanon with quantities of fuel to operate power plants and restore electricity supply in the country", Algeria's state radio announced on 18 August, without disclosing details on volumes or delivery dates. A Lebanese source with knowledge of the matter told Argus today that the initiative is still at a "diplomatic" level. "The prime ministers have spoken but the energy ministries have not gotten in touch yet," the source said. Lebanon's electricity ministry said on 17 August that the last operational unit at the country's Zahrani power plant was "forced to shut down... due to the complete depletion of the plant's fuel oil reserves, resulting in a total power outage across all Lebanese territories". The shutdown affects essential facilities including "the airport, port, water pumps, sewage systems and prisons", the ministry added. The Lebanese source clarified that Algeria's offer is a form of aid and not the prelude to a supply agreement. "This is not an agreement. Why would we have an agreement with Algeria if we already have one with Iraq?" the source said. Lebanon imported fuel oil under an agreement with Algeria's state-owned oil company Sonatrach for almost 15 years until 2020. But the deal was suspended following claims that a subsidiary of Sonatrach , sub-contracted to deliver fuel oil to Lebanon, had provided adulterated product. Sonatrach denied any wrongdoing and informed Lebanon that it would not renew the agreement after its expiry in December 2020. "This isn't the first time Algeria has offered to help Lebanon in recent years," the source said. "They have an interest in seeing the relationship take a turn after what happened," the source claimed. Iraqi connection Lebanon signed a rolling agreement with Iraq in July 2021 that allows Beirut to buy fuel oil from Baghdad and resell it for products it needs. Lebanon's power plants can run on certain grades of fuel oil and gasoil but not the sort of heavy fuel oil that Iraq provides. Lebanon sells the Iraqi fuel oil to private-sector companies, which in return provide on-spec spot cargoes for the Lebanese power sector. Lebanon said it would set up a fund at its central bank to pay Iraq. The agreement includes a deferred payment mechanism for one year from the date of receipt. Iraq agreed in May last year to continue supplying fuel oil for another year and to increase the quantity, in a bid to help alleviate an acute power shortage in Lebanon. The Iraqi government said at the time that it would increase supplies to 1.5mn t/yr (26,000 b/d) from 1mn t/yr, effective from October 2023. Baghdad also agreed to supply Beirut with 2mn t/yr (40,000 b/d) of crude. "The agreement between Lebanon and Iraq is an official one that was ratified by the Lebanese parliament," the Lebanese source said, adding that it is unclear why parliament has not addressed renewing the agreement in recent months. Lebanon's acting central bank governor Wassim Mansouri has been refusing to transfer funds to pay Iraq from emergency foreign currency reserves, saying such a move requires parliament's authorisation. "For now, the Lebanese government is looking to buy a spot cargo of 30,000t of fuel oil to address the current situation," the source said. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Tighter supplies lift Singapore trucked bitumen prices
Tighter supplies lift Singapore trucked bitumen prices
Singapore, 19 August (Argus) — Singapore trucked bitumen prices have inched up this month because of tighter supplies in the city-state, despite relatively moderate consumption by key consumer Malaysia. Singapore-origin bitumen on tanker trucks were sold to Malaysia at around $485-497/t ex-refinery during the week of 16 August, up by $20/t at the high end from $475-477/t ex-refinery during the first two weeks of July. Malaysian bitumen demand has been supported by several post-Hari Raya Puasa projects in full swing in this year's second quarter and pent-up demand from the previous year's incomplete projects. But market participants described demand as moderate as many road projects were affected by intermittent rainy weather in some regions, including Johor Bahru and Kuala Lumpur, and because of a change in a diesel subsidy policy in June. Bitumen-related businesses, like tanker truck transportation and premix operations, no longer get diesel subsidiesaccording to the new regulations, dealers told Argus, adding that many contractors took to the market sidelines or slowed operations because of the additional costs. Diesel is heavily used in premix operations, a key step before laying the road, where bitumen is blended with gravel, sand and other aggregates. Overall bitumen availability in Malaysia is tight as a major refinery in the region cut production and halted bitumen sales since June. This pushed dealers to seek more Singapore-origin tanker truck cargoes but production cuts at refineries in the city-state limited availability. Limited supplies from Singapore and the prospect of a demand recovery in southeast Asia for this year's second half have continued to support seaborne prices. Argus assessed weekly fob Singapore ABX 1 prices at $440/t on 16 August, up from $426/t fob Singapore for the same period last month. Singapore tanker truck bitumen cargo prices are typically at a $10-15/t premium to the ABX 1 but trucked prices are about $50-60/t above the ABX 1 in August, widening the price gap. The weekly Singapore tanker truck prices were assessed by Argus at $491/t ex-refinery on 16 August. Malaysian tanker truck traders are expecting Singapore equivalent prices to fall in the coming weeks on expectations that production will increase. Singapore refiners are likely boosting production as the gap between seaborne bitumen prices and high-sulphur fuel oil prices is narrowing, indicating better margins for bitumen, market participants said. Refiners informed truck cargo buyers that they will soon be able to purchase at least 5-6 loads a day, up from 1-2 loads a day so far, a few dealers told Argus. By Chloe Choo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
White House confidence grows in climate law
White House confidence grows in climate law
Washington, 19 August (Argus) — US president Joe Biden's administration is feeling increasingly assured that climate-related tax credits in the Inflation Reduction Act (IRA) will be safe from repeal, as hundreds of projects funded through the law take root in areas represented by Republican officials. The law — two years old last week — created an estimated $663bn of tax credits through to 2033 that are available for wind and solar projects, biofuel producers, electric vehicle (EV) manufacturers, clean hydrogen production and other energy projects. White House officials say tax credits created by the law are giving companies the certainty to invest in clean energy and zero-emission vehicle projects, prompting an estimated $282bn in investment that is creating jobs in Republican-led districts. "No Republicans voted for the IRA, but they know their constituents are receiving the benefits," Biden's climate adviser, John Podesta, says. The majority-Republican US House of Representatives last year voted 217-215 to pass a bill that would repeal nearly all the law's clean energy tax credits. But 18 House Republicans said last week that they now believe a full repeal would be a "worst-case scenario" that would waste billions of dollars and undercut projects in their districts. Non-profit organisation Climate Power estimates that nearly 60pc of the energy jobs created since the law passed are in Republican-led districts, which tend to be in rural areas that are well suited to manufacturing or utility-scale energy projects. Republican presidential nominee Donald Trump — now losing ground in polls to the Democratic nominee, vice-president Kamala Harris — says he aims to claw back any unspent funds for climate spending. If Trump wins, repealing the IRA's tax credits could help offset the costs of extending $4 trillion in tax cuts set to expire in 2025. But while Trump regularly attacks federal support for EVs, he has moderated his criticism after picking up an endorsement from leading EV manufacturer Tesla's chief executive, Elon Musk. "I'm for electric cars, I have to be, because Elon endorsed me very strongly," Trump says, although he adds that EVs should only have a "small slice" of the market. There is a growing understanding that scrapping the IRA is "just bad politics", Podesta says. The White House expects repealing the law will become more difficult with time, as more businesses and consumers benefit from the tax credits. Last year, 3.4mn households received $8.4bn in energy tax credits created by the law, and the administration expects that number to grow. The White House is now pressing industry officials to speak up about the benefits of the law, which replaced short-term tax credits with incentives that will last 10 years or longer. "They need to shout that from the rooftops a little bit," Podesta says. Work remains The Biden administration still needs to implement key parts of the IRA, such as issuing final guidance for the ‘45V' clean hydrogen tax credit, finalising a programme to collect fees from oil and gas companies for methane emissions, and developing regulations that will govern the new ‘45Z' tax credits for clean fuels. Federal permitting remains a major obstacle to the expansion of clean energy projects, particularly power lines that can take a decade or more to approve. The US Senate last week voted a bipartisan permitting bill out of committee that would fast-track approval of electric transmission projects, and in exchange expand federal oil and gas leasing and end the effective ‘pause' on new US LNG export licensing. Congressional negotiators expect progress on the bill during the ‘lame duck' session of Congress after the 5 November elections. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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