Waste-Based Biodiesel Market in 2016 September 2016 GREENEA 5 chemin des Perrières 17330 Coivert - France GREENEA Rumunská 29 120 00 Prague - Czech Republic T. +33 (0)5 79 97 97 50 F. +33 (0)5 46 33 86 18 WWW.GREENEA.COM contact@greenea.com
Agenda What are the key trends shaping the market in 2016? How does the waste-based feedstock and biofuel market perform? What do we expect in the next years? GREENEA 2
What are the key trends shaping the market in 2016?
Low crude oil and high vegetable oil prices as the main drivers of the market in the last months Oil prices remain low Booming veg-oil prices in the last month Main Market Trends 2015-2016 In Europe, increased demand for wastebased biodiesel comes from Italy due to no cap on DC product Fierce competition to source UCO from overseas due to increased local demand Low margin for single-counting biodiesel producers GREENEA 4
How does the waste-based feedstock and biofuel market perform?
European biodiesel market is estimated at 14 million tons
Germany, Italy and the UK are key players on the waste-based biodiesel market WASTE-BASED BIODIESEL PRODUCTION IN 2016 (EST.) WASTE-BASED BIODIESEL CONSUMPTION IN 2016 (EST.) Germany 634 649 Italy Spain 484 640 UK UK 412 580 Germany Holland Italy France 147 199 237 Spain is the second biggest producer, however, due to no DC there, there is no local demand No cap on DC in Italy boosted local demand by nearly 50% compared to last year 385 150 Holland France GREENEA 7
The supply of waste-based biodiesel in Europe does not cover the local demand WASTE-BASED BIODIESEL CONSUMPTION IN EUROPE 10% 2,724 471 285 Percentage of waste-based biodiesel demand in Europe that has to be covered by import 1,470 498 Europe is the main export destination of Asian waste-based biodiesel producers. New investments aimed at supplying the EU market keep appearing in Asia. In Asia, there will be a shift from exporting UCO to using the oil locally for biodiesel production and exporting the ready-made UCOME to Europe. In kt UCO Acids oils / PFAD / POME Cat 1/2 Imports EU demand Nevertheless, the 6,5% import tax remains a significant barrier. Source: GREENEA analysis GREENEA 8
European UCO market is already mature with limited growth possibilities Source: GREENEA analysis GREENEA 9
TOTAL and ENI plants will significantly increase the HVO production capacity in Europe PURE HVO AND CO-PROCESSING PLANTS IN EUROPE +42% 3,870 23% 2,720 3,450 The share of European biodiesel market that HVO might get by 2020 2,300 420 420 Pure HVO Co-processing 2016 2020 Pure HVO plant Co-processing New projects Source: GREENEA analysis GREENEA 10
EUR EUR per per ton ton The margins for UCOME producers have been increasing since the beginning of the year 2015-2016: UCO AND UCOME PRICE DEVELOPMENT 2015-2016: SPREAD BETWEEN UCO AND UCOME 1 000 245 950 240 235 900 850 +5% 230 225 220 800 215 210 750 205 700 +4% 200 195 650 190 600 UCOME FOB UCO DDP 185 180 Spread UCOME / UCO 0 1.1.14 1.5.14 1.9.14 1.1.15 1.5.15 1.9.15 1.1.16 1.5.16 1.9.16 1.1.17 0 1.1.14 1.5.14 1.9.14 1.1.15 1.5.15 1.9.15 1.1.16 1.5.16 1.9.16 1.1.17 The price of UCOME grew by 5% since the beginning of the year while the price of UCO increased only by 4%. This resulted in the improvement of margins for the producers. Source: GREENEA analysis GREENEA 11
Base 100 Base 100 In 2016, UCO and UCOME show again an upward price trend 2014-2016: YEARLY UCO PRICE TREND 2014-2016: YEARLY UCOME PRICE TREND 115 110 110 105 105 100 100 95 95 90 90 85 80 75 UCO 2014 UCO 2015 UCO 2016 85 UCOME 2014 UCOME 2015 UCOME 2016 0 Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec 0 Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec 2016 is the second year in a row when we see a price increase of both UCO and UCOME after a disastrous 2014. This gives some support to the European UCO collectors and helps importation. Source: GREENEA analysis GREENEA 12
What do we expect in the next years?
HVO ASIA Main trends to watch in the next years REGULATION FEEDSTOCK TECHNOLOGY New investments in Europe and overseas Conversion of non-profitable plants to HVO units (TOTAL, ENI) Growing demand for HVO diesel due to its superior parameters and possibility to blend with out of spec diesel to improve its quality Use of new feedstock in the biodiesel industry, e.g. crude tallow oil Use of acid UCO, acid oils and POME Opening up to lower quality high acidity feedstock The demand for UCO is growing locally in Asia due to new investments in waste-based biodiesel plants there Instead of UCO, Asian producers start to export more UCOME to the European market Adding pre-treatment units to already existing refineries to increase feedstock flexibility Adding distillation columns to improve the quality of the final product Implementation of DC in new countries: Spain, Poland Changes in the regulation in the Netherlands Changes in DC feedstock rules in Italy GREENEA 14
Opportunities to capture and challenges to face in the waste-based sector in the next years OPPORTUNITIES New technology investments to process high acidity feedstock and thus increase the sourcing potential and decrease the costs. Continuous demand for renewable fuels due to obligation from the EU. Increasing interest in renewable fuel mandates also overseas (e.g. Peru, Colombia, Argentina, Brazil, Indonesia, Malaysia, Philippines). CHALLENGES Fierce competition to source UCO both in Europe and in Asia due to increasing local demand. This is caused by the switch to local UCOME production and export of ready-made product to Europe. Higher demand for feedstock coming from new HVO players. High volatility of veg oil prices and low crude oil prices. Possibility of an increase in freight rates due to bankruptcy of Hanjin Shipping, a Korean shipping line. GREENEA 15
Why Greenea?
Why Greenea? MARKET EXPERIENCE GREENEA is an independent brokerage and consulting company founded in 2007. It specialises in waste-based raw materials and biofuels. GREENEA offers its services to companies using raw materials in their production as well as to various other players from the oleo-chemical, animal feed, bioenergy and biofuels markets. Founded in 2007 Since 2011 our average annual growth is 18% It was our conscious and strategic choice to position ourselves on the market of raw materials that do not compete with the food sector. GREENEA OFFICES IN EUROPE WIDE INTERNATIONAL PRESENCE Paris, France Prague, Czech Republic From our two offices in Paris and Prague we communicate with clients from all around the world thanks to our international and multilingual team. We speak: English, Spanish, Portuguese, Polish, German French and Italian GREENEA 17
www.greenea.com Fabien Hillairet CEO & Biofuels Broker +33 5 79 97 97 51 fabien.hillairet@greenea.com Victor Allemandou Biofuels Broker +33 5 79 97 97 52 victor.allemandou@greenea.com Katarzyna Gołąb Feedstock Broker +33 5 79 97 97 53 katarzyna.golab@greenea.com Member: GREENEA 5 chemin des Perrières 17330 Coivert, France GREENEA Rumunská 29 120 00 Prague, Czech Republic