Biodiesel to drive 2025 palm oil prices: IPOC

Spanish Market: Agriculture, Biofuels, Chemicals
08/11/24

Palm oil prices are likely to be supported by tight supplies in 2025, as Indonesia is slated to begin a 40pc biodiesel blending mandate (B40) and crude palm oil (CPO) production growth is slowing, market experts said at the 20th Indonesian Palm Oil Conference and 2025 Price Outlook (IPOC 2024) in Nusa Dua, Bali.

Higher blending mandates and tighter supplies may keep CPO futures above 5,000 ringgit/t ($1,130/t) during the first half of 2025, as could firmer lunar new year and Ramzan demand between January-March, Godrej International director Dorab Mistry said.

Indonesia plans to implement B40 in 2025, according to its minister of bioenergy Edi Wibowo, before moving to B50 before 2030. If Indonesia enforces B40 as planned, palm oil prices may rally an additional 10-15pc over current prices in the first quarter of 2024, Oil World analyst Thomas Mielke said.

But industry experts were sceptical that Indonesia's B40 will materialise, citing current tight supply of CPO and a relatively wide palm oil-gas oil (POGO) spread, which would exert more pressure on government subsidies. Indonesia subsidises biodiesel producers for the difference between gasoil and biodiesel production cost, using funds accrued from export levies on palm oil products.

With crude oil prices possibly constrained, higher subsidies will be required to fill the gap, according to consultancy Transgraph's Nagaraj Meda. Subsidies of $5.6bn, $4.76bn, and $3.53bn will be required should Ice Brent crude prices hit $68.50/bl, $75/bl, and $85/bl respectively under B40, Meda said. Under the current B35 programme, biodiesel subsidies have cost the Indonesian government $2.56bn so far in 2024. The export levy structure — which was adjusted in October — is insufficient to fund a B40 programme.

"The export levy and tax structure will need revision urgently", Mistry said.

Soy soars

Palm oil output will grow moderately in 2024-25, while production of rival soybean oil will be higher, the conference heard.

Mielke expects palm oil production to increase by 2.3mn t, and soybean oil production to rise by 3.3-3.5mn t. Sunflower and rapeseed oil production will fall by 3.8mn t in 2024-25, he forecasts.

Glenauk Economics director Julian McGill said high palm oil prices will drive US biofuels demand towards soybean oil, driving some correction in palm oil prices.

Elevated CPO prices are making palm oil mill effluent (Pome) and used cooking oil (UCO) uncompetitive in the EU and US as biofuels feedstocks, reducing demand, he said. Palm oil prices are now well above those for waste oils, which tends to tighten supplies of UCO in southeast Asia as there is less incentive for restaurants and factories to sell their oil. Assuming gasoil prices do not increase, McGill said fundamentals are not enough to support current palm oil prices. He sees the fob Indonesia price returning to $1,000/t before the end of 2024, but said CPO futures on the Bursa Malaysia exchange will remain between $950-1,050/t due to lower stocks following firm exports during 2024.

Coconut falls

In the lauric oil markets, Mistry is projecting an increase in prices during the 2024-25 period as he expects coconut oil (CNO) production to decrease.

He forecasts CNO prices to continue on an upward trend until the second half of 2025, ranging between $1,800–2000/t cif Rotterdam until June. Crude palm kernel oil prices are expected to follow CNO during the same period, Mistry said.

By Deborah Sun and Carolina Palma

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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.

Singapore bunker sales jump 19.5pc in October

14/11/24

Singapore bunker sales jump 19.5pc in October

Singapore, 14 November (Argus) — Bunker fuel demand at the port of Singapore rose by 19.5pc on the month to 4.8mn t in October, supported by stronger enquiries from shipowners. It takes total bunker consumption at the port to 45.3mn t in the first 10 months of the year, putting Singapore on course to break last year's record high sales of 51.8mn t. The latest statistics release from the Maritime and Port Authority of Singapore (MPA) show consumption of both conventional and alternative marine fuels rose strongly last month as more ships refuelled in Singapore. Bio-bunkers and B24 demand hit a new record monthly high of 116,200t, taking the total for January-October to 586,500t. Consumption has already exceeded last year's 518,000t, driven by shipping emissions compliance requirements set by the EU and IMO. Demand for B24 is expected to steadily rise in the coming months ahead of the implementation of the FuelEU regulations from January 2025. Demand for LNG as a marine fuel at the port of Singapore increased by 37pc from September to 50,600t in October, which was also a new record high for monthly consumption. "In general, we are seeing bigger enquiries in the last month or so," said a London-based trader. Sales of very low sulphur fuel oil (VLSFO) in Singapore rose by 11.8pc from September to 2.5mn t last month, while high-sulphur fuel oil (HSFO) consumption jumped by 11pc to 1.8mn t. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

California RD plant signals later start up

12/11/24

California RD plant signals later start up

New York, 12 November (Argus) — An long-delayed project to convert a Bakersfield, California, oil refinery to produce renewable diesel (RD) has been given another extension for start up. Global Clean Energy Holdings, working to open a 15,000 b/d RD refinery, and trading house Vitol agreed last week to adjust the terms of a supply and offtake deal singed in June. The initial agreement said that Vitol could exit the agreement if the refinery was not producing at least 5,000 b/d of renewable diesel by the end of October, but that deadline has now been moved to 15 December. Global Clean Energy told Argus last month that it still has "plans in place to complete the remaining work and start up the facility" despite recently cancelling an agreement with its principal contractor. Vitol, after an initial three-year term, can now request up to three one-year extensions of the contract, up from two in the initial deal. The agreement, which cleared the way for former business partner ExxonMobil to exit, stipulates that Vitol will be the exclusive supplier of feedstocks to the plant and exclusive marketer of all fuel and environmental attributes. The revised agreement also says that if Global Clean Energy modifies its credit agreement to allow for more than $330mn in debt financing, then the renewable fuels producer will have to pay Vitol an additional fee that increases as more funds are borrowed. Global Clean Energy declined to clarify whether it had already triggered the obligation to pay Vitol the excess fee, saying that it could not provide more information ahead of filing its quarterly investor report "in the near future." If the plant begins operations as planned, it will have to contend with a challenging investment environment for biorefineries given recently low environmental credit prices and uncertainty around how president-elect Donald Trump will enforce a new federal clean fuels tax credit. At the same time, California regulators agreed last week to update the state low-carbon fuel standard, including by setting stricter carbon intensity targets that start next year. The regulatory updates lifted the prices of credits used for program compliance, which are a crucial source of revenue for companies bringing lower-carbon fuels like renewable diesel into the state. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Lower Mississippi draft restrictions lifted

11/11/24

Lower Mississippi draft restrictions lifted

Houston, 11 November (Argus) — The US Coast Guard (USGC) removed draught restrictions from the lower Mississippi River on 8 November, after several rain washed across much of the Midwestern US. Draft restrictions were completely lifted for north and southbound barges on the lower Mississippi River between Tiptonville, Tennessee, to Tunica, Louisiana. Approximately 2-8 inches of rain were reported in Illinois and Missouri in the last seven days, adding around 14 inches to the lower Mississippi River, according to the National Weather Service (NWS). St Louis, Missiouri was at a high of 11.5 inches above baseline on 11 November, up from a low of -1.5ft on 1 November. The USGC has had draft restrictions in place since August, with the river system receiving a short reprieve in early October after rain from Hurricane Helene poured into the US river system. But low water levels and restrictions returned about two weeks later. Prior to recent precipitation, drafts were restricted to 10-10.5ft for southbound barges and tows could not not be greater than 6-7 barges wide. Northbound barges could not draft greater than 9.5ft, tows could not be more than six barges wide, and only four barges could be loaded. High water levels are expected to remain through November, according to NWS but barge carriers have said that water levels will slip quickly if no additional rain falls along the upper Mississippi River. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Low-carbon marine options to grow: Baseblue

11/11/24

Q&A: Low-carbon marine options to grow: Baseblue

New York, 11 November (Argus) — With marine fuel greenhouse gas emissions regulations tightening, ship owners are looking for financially feasible low-carbon fuels to add to their marine fuel repertoire. Argus spoke with Dionysis Diamantopoulos , head of alternative fuels at bunker supplier and trading firm Baseblue, about ship owners' options. Edited highlights follow. Do you expect onboard CO 2 capture and storage technology to become more important in the next five years? The big question for carbon capture technology is the storage capacity for the seized CO2. For example, if an available technology only allows 200t of CO2 to be captured on a voyage for the full capacity of CO2 tanks, then if we take into account that 1t of fuel produces on a tank-to-wake assessment context 3.2t of CO2, this means that after burning 62.5t of fuel oil/gasoil on the vessel that would fill the entirety of the storage capacity of the carbon capture equipment. Considering that this consumption could be a 2-3 day sail for some vessels running on 30-plus day voyages, the proportion of time "online" and "offline" of this technology would be inefficient. In addition, questions over the development of carbon capture technology is dependent on the availability of infrastructure worldwide to collect the captured CO2. If a vessel calls at, say, Brazil and then west Africa, and has a full carbon capture tank from the second day of the voyage and cannot discharge the captured CO2 at a west African port, we have further "offline" time of the capture technology. Other questions could include the space on deck/holds and further design considerations for the carbon capture technology. In 2030 what do you expect the global marine fuel mix to look like? In the immediate future, conventional fuel will remain the front runner, followed by biofuels due to the ability of existing fleets/engines to burn them. LNG usage could also increase if orders/deliveries of new building dual-fueled vessels increase. The IEA's director, Mr Birol, said recently that he expects LNG prices to drop due to the inflow of cargoes of LNG from the US and Qatar in the upcoming year. In the years to come, we will also see more methanol dual-fueled vessels on the water, and different areas worldwide will surely develop to supply these vessels with sustainable methanol types. Ammonia will eventually join the mix after infrastructure developments and protocols have been set for the safety of bunkering procedures. Do you think that next year's FuelEU regulation will be sufficient to encourage the move to sustainable marine fuels? The reality is that we must start somewhere, and FuelEU is a solid driving factor in pushing our industry to begin incorporating alternative fuels in the energy mix. It is vital that FuelEU and EU ETS is incorporated gradually into shipping. A charge to completely eradicate emissions within the next year or so would not be reasonable, viable or achievable. This phase-in period also assists in avoiding stranded assets and global trade disruptions. To comply with FuelEU, shipowners must know each alternative marine fuel's well-to-wake (full lifecycle) greenhouse gas emissions scores, but there is a lot of confusion around these. What well-to-wake emissions would you say each fuel has? It is not a question of my own or others opinion; it is rather what can be proven with the relevant documentation, for example, from the proof of sustainability documentation that ISCC-certified suppliers can publish. This also showcases why having a proper paper trail and documentation that officially accompanies the supplies is important. If we are talking about the default values, they would be: B100 16.37 gCO2eq/MJ; B30 MGO 70.18 gCO2eq/MJ; B30 VLSFO 71.73 gCO2eq/MJ. Fossil LNG are default values based on the type of engine. For LNG Diesel DF, it is 76.13 gCO2eq/MJ. We have not yet delivered bio-LNG or bio-methanol, so we are unsure of the GHG savings. China is lagging behind Singapore in terms of biodiesel bunker (B24) sales. Do you expect Chinese biodiesel bunker demand to pick up next year? Singapore is the king of bunkering in the region and ranks as one of the largest global bunkering hubs/ports. But Hong Kong's biofuel supplies, namely B24 VLSFO, have started and have picked up. Specifically, we at Baseblue already have recurring customers who lift biofuel blends in Hong Kong. Is conventional bunker trading this year more or less competitive than last year? Conventional bunker trading this year is more competitive compared to previous years. In my opinion, this has to do with various factors. First, crude oil prices have been under pressure. Whenever prices are under pressure, smaller trading houses try to take advantage of the fewer financing needs and appear more competitive. Next, bunker trading companies have sprouted exponentially over the last few years, which is enough to increase competition. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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