This publication is interesting because it presents the consolidated balance sheet of ethanol and biodiesel for the period 2007 to 2016. Thus proceeded to estimate future initial stock, production, exports, domestic consumption and final stock of biodiesel for years 2015 and 2016. Enclosed is a picture with all relevant data.
In the USDA some important issues are detected. They are:
a) estimates that production will fall biodiesel Argentina this year and in 2016 compared to last year (2014).
b) Slowly it is going to grow the importance of domestic consumption over exports of biodiesel. This situation by closing the European market and lower sales to North Africa will occur. It could grow sales to the United States.
c) not expected to increase the mandatory cut in Argentina during 2015 and 2016.
d) low utilization of installed capacity during 2015 and 2016 is expected.
The main comments from the US Department of Agriculture are as follows:
a) The USDA estimated that Argentina will fall production of biodiesel in 2015 and 2016 compared to last year (2014).
Biodiesel-bcr-soja.gifLa biodiesel production in 2015 has been estimated by the agency in 2,070 million liters, significantly lower than the year 2014 would have amounted to 2,930 million liters. This implies a strong year drop of about 30%. The main reason for the decline is the significant drop would be recorded in the exports of biodiesel directed to North Africa, an area that uses this raw material to mix with the local diesel. The USDA reports something they had already discussed local specialists (Claudio Molina, Gustavo Idigoras and others) is that because of the sharp drop in world oil prices in late 2014 oil prices biodiesel from Argentina are not currently competitive to supply the international market where it operates discretionary demand, that is, one in which the biodiesel competes with mineral diesel price.
The USDA expects the increase in exports of biodiesel to the United States in 2015 may come to partially offset this decline. This market is the aim of the Argentina industry for this year and next. Local exporters timidly began to explore the market in late 2013, when there were shipments to supply biodiesel as heating oil for the US east coast.
In 2014, local exporters markets switched back to assist the North African market. The spread between the low price of soybean oil and the price of diesel (called BOGO) returned to local biodiesel exports in sufficiently competitive against diesel. This situation is reversed in late 2014 with the strong drop in the price of oil.
Consequently, it is entered into in 2015 and 2016 has been trying to export to USA, which will not be easy because schemes must be fulfilled very strict traceability and certification.
By 2016, the USDA expects a recovery in Argentina biodiesel estimating that could reach 2,330 million liters due to increased domestic consumption by probable recovery of the local economy and an increase in exports, mainly to the United United. It is a positive fact that the USDA deems a higher level of economic activity and increased consumption of biodiesel in Argentina in 2016.
b) Slowly go growing importance of domestic consumption over exports of biodiesel
The USDA indicates that from the earliest stages of this industry, exports have been instrumental in its development. In the period 2008-2014, average annual exports accounted for over 60 percent of national production. This can be seen in the attached table. But in 2015 and 2016 household consumption could start to have increasing significance as a destination for local production. More than 50% of national production could eventually be used in those years to mixing with the oil destined to the local fleet and other domestic purposes. This would be record figures for Argentina. This effect would emerge by the fall in exports due to two factors:
* The close of European trade, who once was the main buyer of Argentine biodiesel, due to the anti-dumping measures (application of an average countervailing duty of 24.6%) and the subsequent decision of the Spanish Government to exclude Argentine factories List of biodiesel allowed to sell to Spain plants.
Recall that the European market was represented in 2012 about 89% of our external sales (1,385,000 tonnes defracking, cleared).
* The aforementioned decline in exports of biodiesel to North Africa.
It is important to note that the oil in Argentina accounts for about 60 percent of local consumption of fuel use in road mode (auto). As shown in the table, consumption in 2014 would have been 13,420 million liters of diesel about. The remaining 40% is provided by gasoline and CNG. Argentina has a large fleet of vehicles running on compressed natural gas. This is 1.7 million vehicles on a total of 10 million. Most of the light and heavy trucks use diesel mixed with biodiesel. In the use of oil, some passenger rail lines using this fuel. Automakers and oil companies prefer not to momentarily increase biodiesel mixture to ensure optimal vehicle performance, avoid logistical problems and not raising costs.
c) The USDA is expected to increase the mandatory cut in Argentina during 2015 and 2016
The report indicates that since February 2014, the mandatory blending in our country legally fixed amounts to ten percent. The USDA estimates remain at that level until 2016.
d) low utilization of installed capacity during 2015 and 2016 is expected
The report states that the local biodiesel industry has invested over 1,500 million dollars since its inception in 2007, reaching a theoretical current production capacity of around 5,200 million liters in the year. They are capable of operating in Argentina a total of 38 plants of biodiesel. In our weekly informative No. 1691 and 1692 of January this year, we provide detailed information about each plant, their locations and capabilities of individual production.
In the view of the Department of Agriculture, investment in the last three years has slowed dramatically because a business is heavily influenced by local and foreign government policy, as has been the case of closure of the European market. The USDA says the economic situation of the biodiesel industry in Argentina is not good in general terms. It estimated that in 2015, the utilization of installed capacity could be as high as 39%, the lowest since the industry was opened in 2007/2008. The same could rise in 2016 to 45%.
The 38 biodiesel plants operating in our country have individual capacities ranging from 11 million liters per year to 700 million liters per year. The 10 largest firms account for over 70 percent of the installed capacity in the country. Most of these plants are transnational companies that operate internationally and that it had filed large factories crushing of oilseeds in the country. They are responsible for virtually all exports of biodiesel and currently supply less than 25% of the local office.
The balance is distributed among 28 smaller companies with plants that have theoretical individual production capacities ranging from 12 to 110 million liters of biodiesel per year. This group provides about 75 percent of local mandate, aimed at oil refineries. Most of these small biodiesel plants need to purchase raw materials from third parties (soybean oil) and have higher production costs than large plants, most of which are fully integrated.
Large companies are operating at very low capacity. As factories have an integrated crushing and export business of protein meals, grains and vegetable oils for several years; no biodiesel as its main business. Several of these biodiesel plants were built in 2007 and 2008 and are fully amortized.
Smaller companies are in various financial situations, with higher production costs and higher price receive an official mandated. While most small plants are operating to supply the local command, there is a large group of plants that have closed or are working only a few days a month. The few investments would be implemented are aimed at installing small plants
Biodiesel is produced almost exclusively with soybean oil. There are some small plants which recycle used vegetable oil. So far no other raw material that could be used in the near future to produce biodiesel in significant volumes. The production of soybean oil from Argentina in the last five years has averaged 7 million tons, with average exports of 4.5 million tonnes. Most of the domestic consumption of soybean oil used to produce biodiesel. As shown in the table, in 2014 the biodiesel industry used about 2,580,000 tons of soybean oil to function.
e) The report quoted state intervention in pricing
The USDA analyzed in its report that the Government fixed monthly official prices that oil companies have to pay for the purchase of biodiesel producers and export duties. Argues that the government takes a close look at the performance of the two sectors and adjusts variables such that most players have a certain positive return.
Source: BCR / ON24
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