current and future issues and challenges for the oleochemical industry€¦ · challenges for the...
TRANSCRIPT
CURRENT AND FUTURE ISSUES AND
CHALLENGES FOR THE OLEOCHEMICAL
INDUSTRY
• Presentation to PIPOC Oleochemicals Conference 2011
• by Alan Brunskill, Senior Oleochemical Consultant, LMC International
• KL Conference Centre, 15th November 2011,
• Kuala Lumpur, Malaysia
Agenda
Capacity
Capacity ownership
Market Growth
Major Issues –
•Biofuels,
•Taxes/Duties etc, Economy,
•Sustainability
What’s next?
Global Fatty Acid Capacity by Region 2010/11 capacity - ca 9.0 million tons
SE Asia 40
China 22
India 7
ROA 3
Europe 13
N America 11
ROW 4
Global Fatty Alcohol Capacity by Region Total 2010/11 – ca 3.7 million tons
SE Asia 31
China 20
India 4
ROA 2
Europe 23
N America 15
ROW 5
Historic and forecast fatty acid consumption
volumes, by region (2000-2020)
0
1
2
3
4
5
6
7
8
9
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Million T
onnes
North America Europe South East Asia Rest of Asia South America Rest of the World
Historic and forecast fatty acid production volumes,
by region (2005-2020)
0
1
2
3
4
5
6
7
8
9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Million T
onnes
North America Europe South East Asia Rest of Asia South America Rest of the World
Historic and forecast fatty alcohol consumption
volumes, by region (2000-2020)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Million T
onnes
North America Europe South East Asia Rest of Asia South America Rest of the World
Historic and forecast fatty alcohol production
volumes, by region (2005-2020)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Million T
onnes
North America Europe South East Asia Rest of Asia South America Rest of the World
Capacity Ownership
% Capacity owned by raw material
producers
Fatty acids – 60
Fatty alcohols - 25 (50)
Problems affecting Oleochemicals
The economy
Biofuels - Oil Price effect
Biofuels - Disappearing feedstock
Biofuels - Glycerine
Export/Import taxes/Anti-dumping tax
Sustainability
The Economy
Bankers – one way risks only: they get
the bonuses, tax payers/investors pay the
penalty
Politicians – no business experience. Yet
we elect them to run our countries
Economists – only have hindsight
Auditors/Ratings Agencies – never spot
the big problems
Is it any wonder we are in a mess?
Biodiesel effects
Oils and fats prices
Glycerine price/availablility
Raw material availability
Biodiesel Growth 2000-2020
•By 2020 conventional biodiesel will have
grown to 40 -50 Mt
•Glycerine generation will grown to ca 6 Mt
glycerine, (2011 ca 3 million)
•Other types of biodiesel will consume
additional fats and oils, e.g. Neste process
•Total oils and fats consumption for fuel will
be above 50 Mt
Biodiesel production volumes (1995-2010)
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1995 1998 2001 2004 2007 2010
Million T
onnes
North America Europe South East Asia ChinaIndia Other Asia South America Rest of the World
Until 2006, year-on-year changes in CPO prices used to be fairly easily explained in terms of MPOB stock changes.
-600
-450
-300
-150
0
150
300
450
600
750
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
Year-
on
-Year
Pri
ce C
han
ge, M
$/t
on
ne
-500
-375
-250
-125
0
125
250
375
500
625
Year-o
n-Y
ear S
tock
Ch
an
ge, '0
00 m
t
Price Change Stock Change
The relationship has broken down since mid-2007
-2,000
-1,600
-1,200
-800
-400
0
400
800
1,200
1,600
2,000
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Year-
on
-Year
Pri
ce C
han
ge, M
$/t
on
ne
-1,000
-800
-600
-400
-200
0
200
400
600
800
1,000
Year-o
n-Y
ear S
tock
Ch
an
ge, '0
00 to
nn
es
Price Change Stock Change
Brent nominal crude prices plotted against ethylene,
US$ per tonne
0
250
500
750
1,000
1,250
1,500
1,750
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
US$
per to
nne
-5
10
25
40
55
70
85
100
Ethylene Brent crude
Biodiesel use in Germany and the US, reacts quickly to swings in the biodiesel premium over diesel. This links biodiesel to diesel prices.
180
220
260
300
340
380
420
460
500
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Mo
nth
ly B
iod
iese
l D
em
an
d, '
000 t
on
nes
-100
-50
0
50
100
150
200
250
300
Pre
miu
m, U
S$ p
er to
nn
e
US + German Demand Average US & German Biodiesel Premium
Edible oil prices vs crude oil 2006 - 2011
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
EU
Pri
ces,
US$ p
er
ton
ne
Brent Crude Palm Oil Soy Oil Rapeseed Oil PKO Coconut Oil
Other oils vs crude oil
0
200
400
600
800
1,000
1,200
1,400
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
US$ p
er
ton
ne
Brent Crude Olein Tallow Stearin PFAD
Biodiesel Effect on Oils and Fats Availability •US position – tallow rated better than vegetable oils on greenhouse
gas emissions.
•European position – tallow gets a double tax benefit for biofuels in
some countries
•Neste type technology – can use any oil as feedstock (TO, PFAD, PS,
Tallow, Soya, Rape)
Net effect -
In addition to the vast quantities of fats and oils taken from traditional
uses , the price advantage of the cheaper feedstocks favoured by
oleochemicals will be prejudiced and some may just disappear
In the EU biodiesel market, used cooking oil methyl ester is now by far the most expensive, with tallow ME just ahead of rapeseed ME.
800
1,000
1,200
1,400
1,600
1,800
Sep-09 Mar-10 Sep-10 Mar-11 Sep-11
US$/t
on
ne
FAME 0 RME (B100) PME (B99-100) Tallow ME UCOME
Glycerine Price - Biodiesel effect •Long term low prices due to massive
volumes from biodiesel
•New uses only stop this being an
absolute disaster
•Too high prices turn off new uses
•Rapid price cycling as non-traditional
uses come on and off due to price
fluctuation
Historic glycerine production volumes, by sector,
1980-2010
0
1
2
3
4
5
6
7
8
9
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Million T
onnes
North America Europe South East Asia Rest of Asia South America Rest of the World
The biodiesel production growth has kept crude glycerine prices in check, when other commodity prices have been strong.
0
200
400
600
800
1,000
1,200
1,400
1996 1998 2000 2002 2004 2006 2008 2010
EU
Cru
de G
lyce
rin
e, $
per
ton
ne
EU Crude Glycerine EU CPO
Refined glycerine has settled at a premium of over $400 above crude glycerine prices, and have now fallen well below CPO prices.
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1996 1998 2000 2002 2004 2006 2008 2010
EU
Cru
de G
lyce
rin
e, $
per
ton
ne
EU Crude Glycerine EU CPO EU Refined Kosher Glycerine
Indonesian Export taxes
•Keeps a cost advantage for domestic
industry
•Disadvantages the rest of the world
•Will there be retaliation? (Import
duties, anti-dumping taxes, quotas)
•Unnecessary capacity may be built in
Indonesia causing spare capacity
elsewhere (on a global basis)
The new Indonesian export tax system has reduced the export taxes on RBD palm stearin by approximately half
0%
5%
10%
15%
20%
25%
<700 750-
800
850-
900
950-
1000
1050-
1100
1150-
1200
>1250
Exp
ort
tax r
ate
, %
New tax structure Previous export tax structure
At the same time, the Indonesian government has introduced relatively high export taxes on PFAD, after a long period with no such taxes
0%
5%
10%
15%
20%
25%
<700 750-
800
850-
900
950-
1000
1050-
1100
1150-
1200
>1250
Exp
ort
tax r
ate
, %
New tax structure Previous export tax structure
Anti – Dumping Duties on Alcohols
•Formal complaint by two European producers
•EU puts variable anti-dumping tariffs on
Malaysian, Indonesian and Indian producers
•A number of the affected producers claim not
to have shipped alcohol to the EU in the
period in question
•One complainant has now withdrawn
Users are upset, producers are upset
Sustainability Issues •Land use, Raw materials, Pipeline, Storage, Traceability, etc.
•But does the ultimate consumer really want it? NO, the ultimate consumer wants no more deforestation and safe raw materials, doesn’t care about the rest and certainly doesn’t want to pay for it •For oleochemicals the danger is being hijacked by the edible/biofuel industry problems
What’s next?
•Geographic expansion? - Indonesia,
China, India, South America
•Contraction? – US, Europe
•Downstream activities? - surfactants,
consumer products.
•Green chemistry - new ways of
making chemicals from natural
sources.
An explosion of new names, along with some
familiar players…
Thank you for your kind attention
Acknowledgements: LMC International, Oleoline/HBI, Industry Players; Biofuels Digest;
BIO; Biorefining Week; Benson Ford Research Center; & ICIS