 Biodiesel: In 2014, the US biodiesel industry was completely under the vacuum of policy stimulus. The price of biodiesel fell by 21.35% compared with the beginning of the year due to the weakening of crude oil. It is expected that the annual biodiesel production will drop by 10%-12%. 11.8-12 billion gallons. The United States will resume the 2014 tax subsidy, but there is no real positive for 2015. South American biodiesel stimulation policies are frequent and production continues to improve. Southeast Asia has raised the proportion of domestic additions to stimulate production. However, if the international crude oil price runs at a low level in 2015, global biodiesel will continue to be under pressure, and the consumer demand originally due to the price of biodiesel premium diesel will be squeezed.
At the end of November, OPEC's refusal to limit production fell sharply on international crude oil prices. The main contract of WTI futures has fallen below $60/barrel at the end of the year, which has fallen by half compared with half a year ago. In essence, the structural excess of the crude oil market caused by the massive exploitation of shale oil in the United States is the root cause of this round of decline. The sub-optimal choices of OPEC and Russia and other traditional oil-producing countries to regain market share have dragged the crude oil market. Enter the price battle quagmire.
Crude oil is the vane of bulk commodities. The sharp drop in oil prices has caused international commodity prices to fall. The trend of oil, corn, sugar and other varieties as raw materials or substitutes for various types of bioenergy is closely related to crude oil prices. From the perspective of bioenergy, the continued decline in oil prices in the second half of the year has seriously affected the production profits of biofuels in various developed countries. Crude oil is once again caught in a price war. Low oil prices will become the main theme of the market next year. Where will the bioenergy market go?
The first part of fuel ethanol
I. United States
In the two major areas of bioenergy in the United States, the fuel ethanol industry and the biodiesel industry are clearly different: biodiesel prices have long been higher than diesel oil, and it is difficult to stimulate the active exchange demand of the terminal. The development of the industry in the past few years has been dependent on policies. Supporting, but from the scope of use, the implementation of B5 has not reached the upper limit, there is still room for growth; the fuel ethanol industry completely entered the market after the tax subsidies and export tariffs expired in 2011, but its domestic consumption is early At the end of 2012, it reached 10% of gasoline consumption. Since the annual consumption of gasoline in the United States is small, it is difficult to achieve the required amount of RFS originally required, that is, facing the so-called “blend wallâ€. .
Looking back at 2014, the price of ethanol in the United States has been magnificent, with a range of 1.48-3.15 US dollars per gallon. In the first quarter, due to heavy snow, transportation was not smooth. The ethanol price in the eastern port soared. The spot price of ethanol in New York City rose by 89.25% in two months, driving the ex-factory price of ethanol in Iowa to rise by 64.09%. In the second quarter, the price of ethanol improved. In the third quarter, as the output increased and the price of crude oil fell, the price of ethanol weakened. In early October, the spot price of ethanol in Iowa fell to a low of 1.48 US dollars per gallon during the year, a new low since July 2010, and entered the weekly output released by the EIA in November. The inventory data was positive for the market, and the ethanol price moved against the crude oil price. As of the beginning of December, the ethanol price increased by 61.33% compared with the end of the third quarter. In terms of by-product DDGS, China banned DDGS imports in disguise, and the US DDGS ex-factory price continued to fall in the second half of the year. At the end of October, it touched the lowest price of $95/short ton in four and a half years. The DDGS revenue contribution rate fell to 12%. The highest has reached 28%. In terms of raw materials, US corn has been producing high yields for two consecutive years, providing relatively low-cost raw materials for ethanol production. The spot price of corn in Iowa has continued to fall since the beginning of May, and the lowest is down to 3.17 US dollars per bushel, the lowest level in five years. According to calculations, the production profit of medium-sized manufacturers in Iowa reached the highest value of 1.55 US dollars per gallon at the end of the first quarter, but with the drop of ethanol in the third quarter, the minimum profit fell to 0.01 US dollars per gallon. .
According to data released by EIA, in the first 11 months of 2014, the United States produced 12.905 billion gallons of fuel ethanol, an increase of 8.75% compared with the same period of last year. It is expected that the annual production in 2014 is expected to exceed 14 billion gallons, a record high. The improvement in output is attributed to the growth of consumption. In the first nine months of this year, consumption increased by 2% year-on-year. On the other hand, it attributed to a strong rise in exports. In the first nine months, exports increased by 42.89% year-on-year, higher than the past two. At the annual level, with the increase in ethanol prices in Brazil in the fourth quarter, US ethanol exports are expected to continue to rise, and the annual export growth rate may reach 50%.
Annual Outlook: Looking forward to 2015, the US ethanol industry will be affected by four factors. The first is the policy factor. When the 2014 RFS standard was first announced in November last year, the total amount of biofuel added was reduced from 16.55 billion gallons to 15.21 billion gallons. The biggest adjustment was to reduce the amount of corn ethanol added from the original 14.4 billion gallons to 13.01 billion gallons. The launch of this move solves the conflict between the “additional cap†problem and the RFS standard, but it is not conducive to the growth of the ethanol industry. In the second half of this year, the market is eagerly expecting the EPA to raise the standard again, but it failed. Due to the production of cellulosic ethanol (18.20 million gallons of cellulosic ethanol in the first ten months of this year, commercial production has begun to take shape, surpassing the annual RFS standard adjusted at the end of last year, but still far from the original RFS2 plan.) The EPA may modify the existing RFS system in 2015, which will become a focus of the market next year, but in fact, due to the “additional ceiling†of gasoline, it is unlikely that EPA will raise the standard for corn ethanol.
The second is domestic demand. The weaker crude oil price will drag down the price of gasoline. In the past, the development of the ethanol industry mainly relied on its price relative to gasoline discount. If the future price of gasoline falls more than the decline of ethanol, even the rise of ethanol will inhibit the active consumption demand of downstream terminals. Domestic consumption will remain at around 10% of gasoline consumption, or the minimum addition of RFS standards (the two will eventually become consistent), and the price elasticity of ethanol consumption is not large. Historical data shows that the peak gasoline consumption in the United States occurred in 2007, reaching 134.9 billion gallons, and the lowest in recent years was 131.1 billion gallons in 2011. From the gasoline consumption data, if the ethanol addition ratio is still maintained at 10%, it will be difficult for the US ethanol industry to grow. In recent years, the promotion of E15 by downstream terminals is very difficult, and the short-term increase in the proportion of addition is still difficult to achieve.
The third is export. In 2014, US ethanol production is expected to increase by more than 700 million gallons, imports will be reduced by 80% to 240 million gallons, while consumption will increase by 260 million gallons, and exports will increase by about 300 million gallons. It can be seen from the above data that although the ratio of ethanol exports to total supply is only about 5%, the substantial increase in the absolute value of exports is a key factor in the rise of ethanol production. The growth of exports is mainly in Brazil, Canada, the European Union and other countries. The decline in international oil prices in 2015 may reduce the use of fuel ethanol by countries. At the same time, the EU conducts anti-dumping investigations against the United States, and the United States will reduce its exports to the EU. There is no room for growth in the overall export prospects. The key factor is Brazil. If the ethanol cane ratio in Brazil is not lowered, the high ethanol price will be favorable for the export of US ethanol. Therefore, the relative price relationship between Brazilian ethanol and US ethanol will affect the United States. An important factor in the amount of ethanol exported.
The fourth is the price of raw materials. US corn has experienced high yields for two consecutive years, and prices continue to fall. If the planting area declines next year, it is expected to boost the domestic corn price. This will lead to an increase in the cost of raw materials for ethanol, affecting production profit and the enthusiasm of manufacturers to curb the decline in ethanol prices.
II. Brazil
In the 14/15 season, Brazil's sugar cane production was reduced due to drought at the beginning of the year, but ethanol production still increased slightly. From the data point of view, by the end of November, the cumulative sugar cane crush in central and southern Brazil was 554 million tons, compared with 3% in the last crop season, raw sugar production decreased by 4.9% to 31.499 million tons, and ethanol production increased by 3.54% year-on-year to 25.183 billion. l, of which anhydrous ethanol production increased by 0.18% to 10.602 billion liters, and hydrous ethanol production increased by 6.12% to 14.582 billion liters. The ratio of ethanol to sugar cane was 56.49%, which was 2.05 percentage points higher than the same period of last year. The increase in ethanol production has squeezed some of the sugar used in raw sugar.
From the production point of view, due to the sharp drop in international raw sugar prices, the relative production yield of ethanol in Brazil has been better than that of raw sugar this year, which has promoted the growth of ethanol-to-cane ratio and made ethanol production relatively strong. The annual sales price of anhydrous ethanol in Sao Paulo, Brazil is 1.2856-1.5977 reais per liter, and the sales price of hydrous ethanol is 1.1307-1.4382 reais per liter. From the perspective of sales, the proportion of anhydrous ethanol added to 25% after May 1 last year was basically stable. Domestic consumption of anhydrous ethanol increased slightly by 4.41% in the first eight months of the 14/15 crop season. Sales volume decreased slightly by 3.1%, and total domestic ethanol sales did not change much, with a slight decrease of 0.09%. The sharp decline in ethanol exports dragged down the overall sales performance of ethanol, with the export of anhydrous ethanol falling by 61.6%, the export of hydrous ethanol falling by 43.46%, and the total export of ethanol falling by 55.26%. Overall, total ethanol sales in the first eight months of the 14/15 crop season fell by 6.85%.
Annual Outlook: The sugar cane crush in the south-central region of Brazil is nearing completion in the 14/15 crop season, and sugar cane production is expected to fall by 5% year-on-year to 565 million tons. Looking ahead to the new year, ethanol production and consumption remain uncertain. First, after the Brazilian election, the government raised the price of gasoline by 3%. Although the increase was lower than the previous forecast of 5%, it is still conducive to stimulate the increase of future consumption of hydrous ethanol.
Secondly, from the ratio of absolute ethanol addition, the Brazilian government has raised the legal ethanol addition limit from 25% to 27.5%, and the national oil company Petrobras is testing the impact of the new addition ratio on the vehicle. It is reported that the earliest will be next year. The proportion of anhydrous ethanol added was raised in February. If implemented, the next season will increase the consumption of anhydrous ethanol by about 10%.
Third, the expected increase in sales of anhydrous ethanol and aqueous ethanol will prompt sugar mills to increase the ratio of ethanol to sugar. However, the Brazilian exchange rate Real has continued to weaken this year. As of mid-December, the real depreciated by 15.93% compared with the beginning of the year, compared with a low of 25.29% during the year. If the depreciation process of the Real continues next year, the sugar mill will be more willing to produce raw sugar and reduce the proportion of ethanol production.
The second part of biodiesel
I. United States
Oversupply in 2014 led to a sharp drop in US biodiesel prices in January, and then immediately stabilized and rebounded to the beginning of the year. The trend was relatively stable from March to June. In the second half of the year, the US biodiesel sales price followed the crude oil trend and fell sharply. By the beginning of December Iowa state biodiesel average The ex-factory price fell by 21.35% to $3.02 per gallon compared to the beginning of the year.
In terms of production, the price of raw soybean oil dropped by 9.28% to 33.03 cents/lb from the beginning of December. The decline in raw materials was less than the decline in biodiesel prices. Except for a slight profit in the third quarter, the annual production was in a loss. Due to poor production margins, the total US biodiesel production for the first eight months of this year was 791 million liters, down 3.3% from the same period last year. At the same time, EIA postponed the release date of biodiesel-related data after May. According to our estimates, the 13/14 biodiesel production is close to 1.3 billion gallons, and the estimated consumption of soybean oil is about 4.8 billion pounds. If calculated according to the natural year, 2014 is expected. Biodiesel production will fall 10%-12% to 11.8-12 billion gallons from the record high of 1.339 billion gallons created in 2013.
On the import side, US biodiesel imports fell to 67.494 million gallons in the first half of the year due to the cancellation of subsidies, down 13.6% from the same period last year. In July and August, imports resumed markedly, creating the highest single-month import record this year. The main sources of imports are Indonesia and Argentina. However, due to the difficulty in the subsidy policy for biodiesel, it is estimated that the annual import volume in 2014 will be 25%-30% lower than the 315 million gallons in 2013.
In terms of policy, the US tax incentives for the biodiesel industry ended at the end of 2013, while the 2014 RFS draft kept the minimum mandatory addition of biodiesel at 1.28 billion gallons, and the biodiesel industry was completely in a vacuum of policy stimulus. In 2014, the market speculated on whether the United States would resume biodiesel subsidies. In March, the United States announced that there was no biodiesel in the subsidy industry. In April, the biodiesel company’s subsidy proposal was again dead. In early December, the US House of Representatives passed the tax subsidy. The resolution, but only for the whole year of 2014, has nothing to do with 2015. The probability of approval of this proposal is greater than twice before this year, but there is no substantial positive for the biodiesel industry in 2015.
Annual Outlook: The decline in crude oil prices and the lack of stimulus policies are the main dilemmas facing the biodiesel industry in 2014. If crude oil prices continue to remain weak in 2015, biodiesel prices will be suppressed, affecting manufacturers' production profits. If there is no policy stimulus, biodiesel production is expected to continue to decline. Consumption should pay close attention to the discount of biodiesel relative to diesel. If the discount rate is reduced and the mandatory increase is not significantly increased, domestic consumption will be difficult to improve.
In 2015, the expectation of the policy will remain the focus of the weak market. On the one hand, it will focus on whether the subsidy policy can be restored. This is an important measure that directly affects domestic consumption and imports. It will also be important for the global export of biodiesel in 2015. influences. If the United States no longer resumes the tax credit policy, the export volume of the major producing countries will continue to decrease, and global biodiesel production will rely more on domestic consumption. On the other hand, the US Energy Administration's adjustment of the final RFS addition criteria in 2014 and the development of the 2015 and 2016 addition standards will affect the long-term consumption trend of US biodiesel and ultimately affect its production.
II. Europe, South America, Southeast Asia
EU: After the EU imposed anti-dumping sanctions on Argentina and Indonesia, the operating rates of biodiesel enterprises in all member countries increased significantly, and the import volume declined. In July this year, the EU’s anti-dumping and countervailing duties imposed on the United States expired. A new round of investigations is currently underway. The original tariff standards will be implemented until the investigation is over, and the US biodiesel imports will continue to be contained. Since the beginning of this year, the EU's discussion on the upper limit of biofuels has continued, but the atmosphere has eased slightly. In mid-June, the EU Parliament agreed to lower the cap on 7% to 7%, which is higher than the results of the discussion during the year. The loosening of policies for the long-term The suppression of consumption has eased. Oil World expects total EU biodiesel production to reach 10.4 million tons in 2014, an increase of 2.16%.
South America: Brazil, two factors promote the growth of domestic biodiesel consumption. On the one hand, Brazil's diesel demand is increasing year by year. From 2008 to 2013, the compound annual growth rate is 5.5%, which makes biodiesel consumption. The amount increases. On the other hand, the proportion of biodiesel added has been raised from the initial 2% year by year. In May this year, the Brazilian government announced that it will increase the proportion of domestic biodiesel in two steps - from July 1 to B6, and from November 1 to B7. . Each increase of one percentage point will consume more than 50,000 tons of biodiesel per month. Therefore, Brazil's biodiesel consumption is expected to increase by 400,000 tons this year. In the first three quarters, biodiesel production totaled 2.143 million tons. It is expected that the annual biodiesel production will exceed 3 million tons, which will increase by 18% compared with 2013. Biodiesel production is expected to reach 360-3.8 million tons in 2015. The proportion of soybean oil will continue to rise. The annual consumption of soybean oil in 2014 is expected to reach 2.3 million tons, an increase of 400,000 tons compared with last year. Soybean oil consumption is also expected to increase by 500,000-600,000 tons in 2015. At present, Brazil's biodiesel production capacity is about 6.5 million tons / year.
In Argentina, the Argentine biodiesel industry was in jeopardy in the first half of this year. The EU’s anti-dumping sanctions and the end of the US biodiesel tax subsidy policy led to the obstruction of exports. At the same time, domestic biodiesel sales prices were controlled by the government, and manufacturers continued to lose money. Eight small biodiesel companies Bankruptcy, more than 20 companies stopped production. In May the Argentine government introduced a series of measures to stimulate exports and domestic consumption. First, from May 21, the actual export tariff will be lowered from the previous 21.75% to 11.07%. Second, from May 28, 19% of the transportation sector and 22% of the local tax of the power plant will be suspended until December 31, 2015. On the third day, the domestic sales price was raised by 8-10%. The reduction in tariffs is conducive to the opening of new export destinations for Argentine biodiesel companies, such as West Africa and North Africa, and better competition with Indonesian biodiesel. The stimulus policy has received significant results, and domestic production, consumption and exports in Argentina have improved significantly in the second half of the year. In addition to policy stimulus, soyoil prices have weakened, and the spread of biodiesel to diesel has increased, which is one of the reasons for the increase in demand for biodiesel exports. In the first three quarters of this year, biodiesel production totaled 1.865 million tons, a year-on-year increase of 30.9%. In 2014, Argentina's biodiesel production is expected to be 2.7 million tons, of which exports are expected to be 1.65 million tons, up from 1.15 million tons last year; domestic consumption is raised to 990,000 tons, and the B10 addition standard is basically achieved at the end of the year. However, as international oil prices continue to operate at a low level next year, the discount rate of biodiesel relative to diesel prices will narrow. It is expected that exports will be affected by shrinking, and the domestic biodiesel industry in Argentina will be more dependent on domestic consumption.
Southeast Asia: At the beginning of this year, Indonesia increased the proportion of domestic biodiesel to 10% to support palm oil prices and reduce crude oil imports. It is planned to increase to 20% in 2016 and 25% in 2025. The Indonesian government plans to add 4.4 million tons of biodiesel to diesel, but it has not yet reached its target due to the lack of exchange facilities. In the first three quarters of 2014, Indonesia's consumption of biodiesel was 1.06 million tons. It is estimated that the annual consumption in 2014 will reach 1.76 million tons. Indonesia's current biodiesel capacity is 5 million tons. The output in the first three quarters was about 2.9 million tons, which is 15% higher than last year. The increase in export volume is the main reason for the increase in production. In 2014, China became the first biodiesel in Indonesia. Large exporting country.
Malaysia has launched the B5 nationwide this year and has been implementing the B7 since November. Due to the increase in the proportion of addition, it is expected that the annual output of bio-cement will reach 600,000 tons this year, higher than the 470,000 tons in 2013. If B7 is widely promoted in 2015, biodiesel production is expected to reach 700,000 tons/year. The EU's anti-dumping sanctions against Indonesia boosted the export of PME in Malaysia. In 2013, Malaysia's export volume reached a maximum of 4 years, reaching 161,000 tons. However, due to the high yield of European rapeseed, the PME advantage weakened, and the competitiveness of Malaysia's PME exports declined. In the first 11 months of this year, Malaysia’s biodiesel exports were only 67,000 tons, down 57.7% from the same period last year.
Annual Outlook: If international crude oil prices remain low in 2015, global biodiesel prices will continue to be under pressure. Consumer demand due to biodiesel premium diesel prices will be squeezed, resulting in export-dependent countries such as Indonesia and Argentina. The volume of exports will decrease, and the growth of production in each country will be more dependent on the increase in domestic consumption of biodiesel. Therefore, policy changes in various countries will be highly regarded. The policy change will affect the global trade pattern, and at the same time, it is necessary to pay attention to the relative changes between biodiesel prices and diesel.
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