Argus Americas Biofuels

Transcription

1 Incorporating Argus US Ethanol Overview US ethanol markets corrected downward Tuesday, ending gains recorded in the previous two sessions as a supply surplus continues to pressure the marketplace. Weaker D4 biomass-based diesel RINs led the market lower Tuesday s trading session, reversing yesterday s gains. US biodiesel prices weakened amid a pullback in premiums alongside a sell-off of the Nymex ULSD contract. Americas ethanol prices Price summary Ethanol ± $/m³ ± Chicago (Argo) New York Harbor fob Brazil anhydrous Los Angeles low CI Cbot ethanol RINs /RIN Timing Price ± Less 2015 Renewable fuel (ethanol) Biomass-based diesel Advanced biofuel RVO Chicago (Argo) $/m ³ Los Angeles low CI $/m ³ cif Brazil $/m ³ fob Brazil anhydrous $/m ³ New York Harbor $/m ³ Houston $/m ³ Biodiesel Price ± SME New York Harbor B SME Houston fob B SME Chicago fob B SME fob Paranagua $/t SME fob Argentina upriver $/t Cbot soybean oil /lb Biofuel spreads Spread ± Ethanol crush spread $/bushel Heating oil/soybean oil spread Houston less Chicago ethanol New York Harbor less Chicago ethanol Los Angeles less Chicago ethanol Los Angeles less Nebraska ethanol Rule 11 less Nebraska ethanol Contents Ethanol 2 RINs 4 California carbon 4 Biodiesel 5 Latest news 7 Key California carbon prices Vintage Price ± Credits $/t California carbon allowances (CCA) Low-carbon fuel standard (LCFS) Price per gallon CCA price for regular Carbob LCFS price for regular Carbob Copyright 2016 Argus Media group

2 Ethanol Ethanol US US ethanol markets corrected downward Tuesday, ending gains recorded in the previous two sessions as a supply surplus continues to pressure the marketplace. Spot values retreated 1-2, tracking weaker gasoline markets and corn feedstocks. In Chicago s Argo in-tank transfer hub, prompt availabilities weakened more than a half-cent in daily comparison, changing hands at 140 and throughout the day. Discussion for dead prompt delivery emerged at between 140 and 141.5, but failed to stimulate trade. The Rule 11 market gave back half a penny in thin liquidity. Railcars with this week timing were offered at 141 early in the day, with talks ranging just under 139 in afternoon commerce. In the New York Harbor, February barge discussion thinned Announcement Argus completes and extends annual Iosco assurance review Argus has completed its fourth external assurance review of its price benchmarks, extending the scope of the process to cover petrochemicals and fertilizers for the first time, as well as again covering crude, products, biofuels, thermal coal, coking coal, natural gas and biomass benchmarks. The review was carried out by professional services firm PwC. Annual independent, external reviews of oil benchmarks are required by international regulatory group Iosco s Principles for Oil Price Reporting Agencies, and Iosco encourages extension of the reviews to non-oil benchmarks. For more information and to download the review visit our website: Ethanol deals done Market Timing Price Volume 000 USG Chicago Argo 28 Feb-9 Mar Feb-9 Mar Feb-9 Mar Feb-9 Mar Feb-9 Mar Feb-9 Mar Ethanol Low High ± Chicago Argo prompt Argo any Feb Rule 11 prompt New York Any Feb US Gulf coast/south Houston Tampa Atlanta Dallas Nebraska Union Pacific Burlington Northern US west coast Los Angeles low CI Brazil fob anhydrous $/m³ fob anhydrous BRL/m³ 1, , fob hydrous $/m³ fob hydrous BRL/m³ 1, , cif anhydrous $/m³ cif anhydrous BRL/m³ 1, , fob Santos industrial grade* $/m³ fob Santos industrial grade* BRL/m³ 2, , Asia cfr Asia South Korea B grade $/m³ *assessment is as of 19 Feb Ethanol forward curves Chicago, low-high New York, low-high Feb Mar Apr May Related markets Low High ± Spot New York Rbob barge New York Cbob barge Houston Rbob Colonial Houston Cbob Colonial Los Angeles Carbob 84 month Mont Belvieu natural gasoline Settlement Nymex Rbob settlement, Mar Nymex Rbob crack spread, Apr $/bl Current month-to-date averages, Feb Averages Chicago (Argo) prompt New York Harbor prompt Los Angeles low CI fob Brazil anhydrous $/m³ cif Brazil anhydrous $/m³ Copyright 2016 Argus Media group Page 2 of 9

3 Argus market map: Ethanol Los Angeles less Chicago Ethanol: Rule 11 less Nebraska Ethanol: New York less Chicago Ethanol: Rbob: Freight $/t USGC - Itaqui Santos - NYH Nebraska Chicago New York Los Angeles Los Angeles less Nebraska Ethanol: Houston Houston less Chicago Ethanol: Rbob: New York less Santos Ethanol: Itaqui Los Angeles less Santos Ethanol: Houston less Santos Ethanol: Sao Paulo as the month draws to a close. March availabilities weakened 1.5 on the day, with discussion surfacing between 148 and The west coast rail market slid half a penny day-over-day in muted activity. Arizona railcars traded multiple times at Brazil Offer levels for delivered ethanol retreated Tuesday, stirring very little interest from Brazilian buyers as contracted volume remain enough to supply the domestic marketplace. Anhydrous ethanol on a cif Brazil basis ticked $1/m³ lower to $472/m³ on the offer side, while appetite in Brazil remained limited for the specification amid sufficient inventories and better remunerations for imported diesel. On the export front, export economics remained sealed off amid stout domestic spot values and weak prices on the US physical market. Anhydrous ethanol hovered in the $ / m³ in thin commerce, while hydrous fuel ethanol fail to stir interest abroad as prompt offers were still seen at $520/m³ while potential buyers maintained bids at $425/m³. New York Harbor ethanol vs Rule 11 Brazil anhydrous ethanol vs USGC R11 = USGC = Copyright 2016 Argus Media group Page 3 of 9

4 RINs deals done Market Timing Price /RIN Volume 000 RINs Biodiesel Ethanol 2014 E RINs RINs Weaker D4 biomass-based diesel RINs led the market lower Tuesday s trading session, reversing yesterday s gains. Current year D6 renewable ethanol RINs traded at 73 and /RIN on the day, moving flat from yesterday s mark. Prior year ethanol credits held a marginal premium to the 2016 D6s, changing hands at 73 and /RIN in the first half of the session before bids and offers climbed to around 73.5 /RN. The 2016 vintage year D4 biomass-based diesel RINs retreated a quarter of a cent today, changing hands at 78 /RIN with heard trades at 77.5 and 78.5 /RIN. The D4/D6 spread narrowed to 4.88 /RIN. Concurrent year D3 cellulosic RINs received a lone offer at 188 /RIN today and were heard trading at 180 /RIN yesterday. The 2015 vintage D3s were talked between and 135 / RIN in the morning, with discussion narrowing to between 131 and 133 /RIN later in the day. The costs of compliance as measured by Argus Renewable Volume Obligation (RVO) fell by 0.01 to RINs /RIN Low High ± Renewable fuel (ethanol) Biomass-based diesel Cellulosic biofuel Advanced biofuel Renewable Volume Obligation (RVO) RIN spreads /RIN Today ± Prior day 5-day avg Category spreads, 2014 Biodiesel D4-ethanol D Biodiesel D4-advanced biofuel D Advanced biofuel D5-ethanol D Category spreads, 2016 Biodiesel D4-ethanol D Biodiesel D4-advanced biofuel D Advanced biofuel D5-ethanol D Vintage spreads, Biodiesel D Advanced biofuel D Ethanol D RVO (current year) 8.00 California carbon California carbon California and Quebec carbon allowances fell by about 2pc today, as a sell off left the February- and December-delivery contracts below the program's price floor. The February-delivery contract fell by 24 to $12.50/ metric tonne, with 3.2mn t traded today. Over 7.1mn t went in the December-delivery contract, which dropped by 32 to $12.70/t. The December 2017-delivery CCAs lost 63 to end the Copyright 2016 Argus Media group Page 4 of 9

5 day at $12.95/t. The declines were among the largest for the market since The drop comes a day before California and Quebec announce the results of the first auction of the year, which was held last week with a reserve price of $12.73/t. If demand for allowances at that price was less than the amount on offer, unsold CCAs will be held by California until a future auction. Biodiesel Biodiesel US US biodiesel prices weakened amid a pullback in premiums alongside a sell-off of the Nymex ULSD contract. Physical biodiesel markets were relatively active in today s session. In the New York Harbor, B99 RIN-less material was talked between Nymex -50 and -38 with March-April delivery timing, translating to either side of Nymex +743/USG with RINs. Offer interest for B99 RIN-less Gulf Coast availabilities surfaced at Nymex -40 for March delivery and at Nymex -35 on a Q2 basis. In the Midwest, B99 June fob Kentucky material received discussion between Nymex +72 and +80. B99 Q3 fob Indiana sellers cars found bid and offer interest at Nymex +70 and +74, respectively. Margins continued to improve Tuesday, as the soybean oil/ heating oil (HOBO) spread added more than 2 to measure at Argentina In Argentina, prompt values of crude soybean oil corrected downward in an overbought paper market in Chicago. March discounts inched 0.2 /lb higher to -0.5 /lb, only partially mitigating a selloff on the paper market. In Chicago, March futures fell sharply, losing 0.75 /lb over the course of the session to /lb. Soybean oil to be acquired in April also added 0.2 /lb to CBOT /lb, while May to July product climbed 0.28 /lb higher to CBOT-1.2 /lb in thin discussion. Dropping feedstock values filtered into the biodiesel market, which plunged $12/t lower. Conventional biodiesel could be had for $627/t in the Parana upriver region, while EPAcertified SME biodiesel was quoted at $790/t. Assessment rationale Assessment rationale In the absence of trades for Houston B100, an offer for B99 RIN-less March availabilities at Nymex -40 was calculated California carbon allowances (CCA) $/t Vintage Delivery Bid Ask Price ± 2016 Dec Dec Dec CCA volume-weighted averages $/t Vintage Delivery Low High VWA MTD 2016 Dec Vintage Delivery Trades MTD Volume MTD 2016 Dec ,126,000 14,277,000 CCA price for gasoline, diesel Winter 23 Feb ± Summer 23 Feb ± Jan ± index Regular Carbob Midgrade Carbob Premium Carbob Distillate ULSD CO2 California carbon offsets, 19 Feb $/t Bid Ask Price ± Seller-guaranteed year invalidation California low-carbon fuel standard (LCFS) credits $/t Vintage Bid Ask Price ± VWA Trades Volume MTD , Jan index California LCFS cost for gasoline, diesel Fuel Price ± Carbob Ultra low-sulfur diesel LCFS premium per carbon intensity point Avg Price ± Ethanol Biodiesel against today's current year D4 RIN assessment, multiplied by 1.5, and adjusted to account for a 100pc share of the blending credit, setting the upper end of the range for the day's assessment at Nymex A 10 range was held for today's premiums, setting the lower end of the range at Nymex +167 / USG. Validated trades done in the Argo prompt timing period were used to set the range for the day's Argus prompt Argo assessment. Copyright 2016 Argus Media group Page 5 of 9

6 In the absence of trades, bids, or offers for February barges, the spread to March barges was held at -2.25, setting the range for the day's Argus New York barge assessment. A bid of 148 and offer of for March barges were used to set the range for the March assessment. In the absence of trades, bids, or offers for prior year D5 advanced biofuel RINs, available participants indicated that the spread to prior year biodiesel RINs held at -2 /RIN, setting the range for the day's assessment. In the absence of trades, bids, or offers for current year D5 advanced biofuel RINs, available participants indicated that the spread to current year biodiesel RINs held at -1.5 /RIN, setting the range for the day's assessment. In the absence of trades, bids, or offers for 2014 vintage year D5 advanced biofuel RINs, available participants indicated that the spread to prior year advanced biofuel RINs held at -1 /RIN, setting the range for the day's assessment. In the absence of trades, bids, or offers for prior year D4 biomass-based diesel RINs, the spread to current year biodiesel RINs was held at /RIN, setting the range for the day's assessment. Current year D4 biomass-based diesel RIN trades meeting the Argus minimum volume requirement of 500,000 RINs were used to set the midpoint for the day's assessment, while heard trades at 77.5 and 78.5 /RIN were used to set the range. In the absence of trades, bids, or offers for 2014 vintage year D4 biomass-based diesel RINs, the spread to prior year biodiesel RINs was held at -3 /RIN, setting the range for the day's assessment. A prior year D6 ethanol RIN trade meeting the Argus minimum volume requirement of 500,000 RINs was used to set the lower end of the range for the day's assessment, while a bid/offer midpoint of 73.5 /RIN was used to set the upper end of the range. Bids and offers observed at between flat and /RIN to the current year ethanol RINs further confirmed the midpoint. Current year D6 ethanol RIN trades meeting the Argus minimum volume requirement of 500,000 RINs were used to set the range for the day's assessment. In the absence of outright trades for 2014 vintage year D6 ethanol RINs, a validated trade for the 2014/2015 ethanol RIN spread at /RIN was used to set the range for the day's assessment. Biodiesel Timing Low/high diff Low-high price ± US B100 SME NYH Apr / SME Houston fob Apr / SME Chicago rail Apr / Latin America fob upriver SME Argentina $/t SME fob Paranagua* $/t SME fob Paranagua* BRL/t 2, , *assessment is as of 19 Feb Related markets Price ± US Cbot soybean settlement, Mar /bushel Cbot soybean meal settlement, Mar $/t Nymex heating oil settlement, Mar Houston ULSD Colonial Latin America Soybean oil Argentina diff to Cbot /lb -0.60/ Soybean oil fob Paranagua* $/t / Soybean oil cif Sao Paulo with 12% ICMS* BRL/t 2,900.00/3, Methanol cif Paranagua* $/t / Glycerine cif China* $/t / Beef tallow cif Sao Paulo with 12% ICMS* BRL/t 2,750.00/2, *assessment is as of 19 Feb Current month-to-date averages, Feb Averages SME Houston fob B SME Chicago fob B SME fob Paranagua $/t SME fob Argentina upriver $/t Brazil ex-mill biodiesel prices per region Mar-Apr ± Jan-Feb Mar-Apr ± Jan-Feb BRL/m³ BRL/m³ $/m³ $/m³ North 2, Northeast 2, Centre-West 2, Southeast 2, South 2, $/m³ values are calculated considering Thursday s exchange rate Data last updated on 19 Feb ANP data Copyright 2016 Argus Media group Page 6 of 9

7 Argus market map: Biodiesel Chicago New York less Chicago $/t Rotterdam Houston less Chicago $/t Houston New York New York less Argentina $/t Paranagua less Rotterdam $/t Houston less Argentina $/t Argentina less Rotterdam $/t Freight $/t Paranagua Paranagua - Rotterdam Argentina - New York Harbor Argentina - US Gulf coast Rosario Latest news US gasoline usage down even as travel rises The Energy Information Administration (EIA) expects US motor gasoline consumption to remain below peak levels seen in 2007 despite an uptick in miles driven. Improved light-duty vehicle fuel economy kept consumption from exceeding peak levels last year even as US motorists increased their vehicle travel by nearly 4pc in 2015 compared to levels recorded in Houston B100 SME vs Gulf Coast ULSD GC ULSD = 0 hhh 18 Nov Dec Jan Feb 16 The EIA s Short-Term Energy Outlook (STEO) estimates motor gasoline consumption in both 2016 and 2017 to average 9.23mn b/d, which would be 0.6pc below its peak in Vehicle travel is expected to increase by 5pc in 2016 and by 7pc in 2017 compared to 2007 levels, the EIA said. Brazil ethanol output breaks new record Mills in Brazil s center-south region produced 132mn l (55,350 b/d) of ethanol in the first half of February as 32 mills continued to process cane beyond the traditional harvest season, Biodiesel RINs vs ethanol RINs (prior year) /RIN Copyright 2016 Argus Media group Page 7 of 9

8 according to Brazil s leading sugar and ethanol producers association Unica. With the increase in output, ethanol production during the 2015/16 reached a record 27.57bn l, up nearly 6pc over the 2014/15 season. Nearly 80pc of the cane harvested in the 15-day period went to ethanol production, with mills favoring hydrous ethanol, which generates cash flow more quickly than sugar. Mills have also been giving priority to ethanol over sugar to fulfill sales contracts and meet regulatory inventory requirements. Unica attributed the large number of mills still harvesting the crop to significant volumes of unharvested cane. Mills lost nearly 50 days of cane harvesting between 1 April 2015, when the 2015/16 harvest officially began, and 31 December 2015, up from roughly 42 days in the same time period during the 2014/15 harvest. An estimated 40mn t of cane was still standing in the fields on 1 January, according to estimates by the National Ethanol Technology Laboratory (CTBE). Unica highlighted that strong returns on hydrous ethanol have also provided incentives for mills to continue harvesting. Unica estimates that 25 mills continued to operate in the second half of February. Unica said ethanol sales were down by 4pc in the first half of February to 996.5mn l, compared to 1.03bn l in the first half of February Hydrous ethanol consumption declined by 3.2pc in January to 1.21bn l, compared to 1.25bn l in the same period of 2014, according to oil regulator ANP. Futures Timing Settlement ± CBOT ethanol Mar Apr May Jun CBOT corn /bushel Mar May Jul Sep CBOT soybean oil /lb Mar May Jul Aug Gulf coast ethanol vs Colonial Rbob 80 Rbob = hhh Nov Dec Jan Feb 16 Advanced RINs vs ethanol RINs (prior year) /RIN 7.00 Ethanol RIN = Chicago ethanol hhh Nov Dec Jan Feb 16 Copyright 2016 Argus Media group Page 8 of 9

9 The most up-to-date Argus Americas Biofuels Report Methodology and Specifications guide is available on Argus Americas Biofuels Argus Assessment Rationale Database For prices used in financial benchmarks, Argus publishes daily explanations of the assessment rationale with supporting data. This information is available to permissioned subscribers and other stakeholders. Subscribers to this report via Argus Direct or MyArgus may access the database here. Other subscribers may request access here or contact us by at Announcements Following consultation, Argus will cease publication of its 2013 vintage RIN assessments due to a lack of liquidity. This will result in the removal of year 1 (2013) from the following assessments: RIN Renewable fuel (Ethanol) D6 category (code PA ) RIN advanced biofuel D5 category (code PA ) RIN biomass-based diesel D4 category (code PA ) RIN cellulosic biofuel (code PA ). Argus Americas Biofuels Methodology Argus uses a precise and transparent methodology to assess prices in all the markets it covers. The latest version of the Argus Americas Biofuels Methodology can be found at: Last Updated: May 2014 For a hard copy, please info@ argusmedia.com, but please note that methodogies are updated frequently and for the latest version, you should visit the internet site. MethodoLogy and specifications guide argus americas BiofUeLs MethodoLogy Contents: Methodology rationale 2 Definition of trading day 2 Survey process 2 Market data usage 2 Verification of transaction data 3 Primary tests applied by reporters 3 Transaction tests 3 Transparency and confidentiality 3 Basis differentials and absolute prices 3 Swaps and forwards markets 4 Publications and price data 4 Swaps and forwards markets 4 Publications and price data 4 Corrections to assessments 4 Ethics and compliance 4 Consistency in the assessment process 4 Review of methodology 4 Changes to methodology 4 Updates to methodology 5 The last day on which the 2013 vintage is published will be 24 February. For further information, contact Zander Capozzola at Zander. Capozzola@argusemdia.com or Argus Americas Biofuels is published by Argus Media group Registered office Argus House, 175 St John St, London, EC1V 4LW Tel: Fax: sales@argusmedia.com ISSN: Copyright notice Copyright 2016 Argus Media group. All rights reserved. All intellectual property rights in this publication and the information published herein are the exclusive property of Argus and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this publication you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, ARGUS Americas biofuels, other ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit for more information. Disclaimer The data and other information published herein (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law. Publisher Adrian Binks Chief executive Neil Bradford CEO Americas Euan Craik Global compliance officer Jeffrey Amos Commercial manager Karen Johnson Editor in chief Ian Bourne Managing editor Jim Kennett Editor Zander Capozzola Tel: houstonproducts@argusmedia.com Customer support and sales Technical queries technicalsupport@argusmedia.com All other queries support@argusmedia.com Houston, US Tel: New York. US Tel: Washington DC, US Tel: London, UK Tel: Astana, Kazakhstan Tel: Beijing Tel: Dubai Tel: Moscow, Russia Tel: Rio de Janeiro, Brazil Tel: Singapore Tel: Tokyo, Japan Tel: Petroleum illuminating the markets Issue Ref: