OFI March/April 2021 by Quartz Business Media

WWW.OFIMAGAZINE.COM

OILS & FATS INTERNATIONAL MAR/APR 2021 ▪ VOL 37 NO 3

SOYABEAN OIL A COVID success story

CHINA

Post-pandemic recovery

OLEOCHEMICALS Supply and demand drivers

Cover March.April.indd 1

15/03/2021 09:56:12

www.desmetballestra.com

Science behind Technology

CONTENTS

IN THIS ISSUE – MARCH/APRIL 2021 FEATURES

NEWS & EVENTS

Oleochemicals

A COVID success story Sales of soyabean oil expanded during the COVID-19 pandemic with biodiesel use growing in the USA and imports increasing in key markets

Photo: Adobe Stock

Photo: United Soybean Board

Soyabean Oil

Supply and demand drivers Southeast Asia accounts for 80% of natural fatty acid and fatty alcohol production and the region is also a major consumer of oleochemicals

Comment

Fat – the unsung hero

News

China

Plant & Technology

Sime Darby begins legal action against NGO head

Global round-up of projects The latest projects, technology and processing news around the world

Photo: Adobe Stock

Photo: Preem

Biofuel News

Post-pandemic recovery China has emerged from the global COVID outbreak stronger than most other nations. What is the outlook for the country’s edible oil sector?

BA planning flights with

partially sustainable fuel Renewable News

BASF signs two biosurfactant agreements

Transport News

Vopak expands storage in Rotterdam, Jakarta

Diary of Events

International events listings

International Market Review

More oil crops needed

Statistics

World statistical data

Cover photo: United Soybean Board www.ofimagazine.com

Contents March.April.indd 1

OFI – MARCH/APRIL 2021

17/03/2021 15:41:10

EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 37 NO 3 MARCH/ APRIL 2021

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com

Fat - the unsung hero With COVID vaccination programmes underway around the world in a push to put the pandemic behind us, it’s worth paying tribute to a niche section of the oils and fats sector making these vaccines possible. Lipids (fat molecules) are being used in the Pfizer/BioNTech and Moderna vaccines, with several companies recently announcing expanded production to meet demand. The ground-breaking element of the Pfizer/BioNTech and Moderna vaccines is that they use messenger RNA (mRNA) – the genetic instructions that our cells read to make proteins (in this case, the instructions on how to make the coronavirus’ distinctive spike protein found on its surface). After injection, the vaccine enters our cells, which read the mRNA sequence and builds the spike proteins, which they display on their surface. This primes our immune system to build the antibodies and T-cells that will fight off a real coronavirus infection if it comes. Because mRNA quickly degrades in the body, it is wrapped in oily bubbles made of lipid nanoparticles (LNPs), specifically four for the vaccines – an ionisable cationic lipid that encapsulates the negatively charged mRNA; a PEGylated lipid that helps control particle life and size; distearoylphosphatidylcholine (DSPC), a phospholipid that helps form the structure of the LNP; and cholesterol, which also contributes to structure.

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Very few companies worldwide supply these custom lipids in the quantities and to the standards needed for vaccine production. In February, one of them – Germany’s Merck KGaA – announced that it would “significantly accelerate the supply of urgently needed lipids” for the Pfizer-BioNTech vaccine. BioNTech itself is also starting to make the lipids at a facility in Germany it recently acquired from Novartis, according to a Chemical & Engineering News (C&EN) report. Also in February, Evonik Industries said it was investing to boost lipids production at two sites in Germany as part of a strategic agreement with BioNTech. The firm is a newcomer to large-scale speciality lipid manufacturing and expects to be making commercial quantities as early as the second half of this year, C&EN says. Meanwhile, British speciality chemical company Croda is increasing production in Alabama at its subsidiary, Avanti Polar Lipids, to supply Pfizer; while German pharmaceutical services firm CordenPharma has been investing in Switzerland, France and Colorado, USA, to supply lipids for Moderna’s vaccine, according to C&EN. The use of lipid nanoparticles in drug delivery systems is not new. Rather, it is their role in new RNA-based medicines utilising ground-breaking gene editing technology. Scientists at Tufts University, for example, reported in February that they had successfully used lipid nanoparticles to carry a mRNA gene editing packaging to livers in mice, reducing levels of LDL or ‘bad’ cholesterol. Evonik’s health care business R&D vice president Stefan Randl sees his firm’s investment extending beyond vaccines to serve developers of next-generation mRNA-based medicines such as cancer immunotherapies, gene-editing therapeutics, and proteinreplacement therapy. “We really believe this mRNA trend is here to last,” he says.

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Lipid nanoparticles are just another illustration of the wide range of applications that oils and fats oﬀer, from the most basic commodity to cutting-edge science. @oilsandfatsint

Oils & Fats International

2 OFI – MARHC/APRIL 2021

Comment March.April.indd 1

Serena Lim serenalim@quartzltd.com www.ofimagazine.com

17/03/2021 15:59:52

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NEWS IN BRIEF WORLD: German chemicals firm BASF announced on 4 March that it had reached its target of procuring palm kernel oil (PKO) exclusively from Roundtable on Sustainable Palm Oil (RSPO)-certified sources by 2020. BASF said it had bought 227,213 tonnes of certified sustainable PKO last year and was now focused on ensuring that its purchases of significant palm oil and PKO intermediates – such as fatty alcohols and fatty acids – were from certified sources by 2025. PKO and its derivatives are used in personal care and cleaning applications. BASF added that 95% of its global palm footprint, totalling 441,107 tonnes, was now traceable back to the oil mill level.

Sime Darby begins legal action against NGO head Malaysia-based Sime Darby Plantation Berhad (SDP) announced on 11 March that it had started legal action against the managing director of an NGO in order to obtain information about a complaint he filed with the Securities Commission of Malaysia about SDP. The company said it was the first time in its 200-year history that it had resorted to taking legal action against an NGO. SDP filed its legal application against Liberty Shared managing director Duncan Jepson on 9 March in the Eastern District of Virginia, USA. It said the aim of the proceedings was to obtain important information regarding a complaint filed by Jepson with Malaysia’s Securities Commission, in which he alleged wrongful disclosures in SDP’s Sustainability Report 2019. Liberty Shared had filed a complaint with the United States Customs and Border Protection agency on 20 April 2020, alleging the use of

forced labour in the production of palm oil in SDP’s Malaysian estates. SDP said it was made aware of the complaint on 7 July 2020, when Liberty Shared posted a summary of it on its website. However, it said the summary did not contain enough information to allow it to close any alleged gaps in its operations. “The Securities Commission started investigations into Jepson’s complaint and then sought further information from [us],” the company said. SDP said it would cooperate fully with the commission and it was therefore vitally important that it obtain limited but critical information from the complaint filed by Jepson. SDP is the world’s largest palm oil plantation company by planted area, according to its website, with oil palm planted across more than 600,000ha in Malaysia, Indonesia, Papua New Guinea and Solomon Islands. It produces around 2.5M tonnes/year or 4% of global crude palm oil.

US plant-based food company Beyond Meat has signed distribution agreements with several high-profile fast food chains, The Independent reports. The company announced the deals on 25 February with McDonald’s and with Yum! Brands, the parent company of KFC, Taco Bell and Pizza Hut. McDonald's will use the Beyond Meat partnership to launch its McPlant burger, as well as explore the development of plant-based pork, egg and chicken products, The Independent wrote. Yum! would use the deal to expand its Beyond Fried Chicken products, as well

Photo: Adobe Stock

Beyond Meat expands deals with fast food giants

Beyond Meat will supply plant-based burgers, pizza toppings and other plant-based products to McDonald's, KFC, Pizza Hut and Taco Bell

as pizza toppings at Pizza Hut. The global rise in consumer demand for plant-based foods

is opening up new markets for oils and fats, which are used to add flavour, moisture and tex-

ture to new meat alternatives. Beyond Meat CEO Ethan Brown said the new deals were a “tipping point” in terms of plant-based meat’s prominence, FoodIngredientsFirst reported. The agreements were an expansion of Beyond Meat’s earlier partnerships with McDonald’s and Yum! Brands, when a number of its products were tested in limited locations, The Independent said. Several fast food chains were also experimenting with new plant-based products, including Burger King which had partnered with plant-based food company Impossible Foods.

France's BNP targets soyabeans from Amazon land French international banking group BNP Paribas announced on 15 February that it will no longer provide financial services to customers who grow or buy Brazilian soyabeans from Amazonian land that has been cleared or converted since 2008. The company said Brazilian beef and soyabean production had accelerated deforestation in the country’s Amazon and Cerrado regions which “legal or illegal, jeopardises the ecological integrity and 4 OFI – MARCH/APRIL 2021

General News March.April.indd 2

future of these two biomes”. There was an “urgent need” for all relevant stakeholders to prioritise land use strategies that integrated zero deforestation, sustainable production and a positive social impact, BNP said. “Financial institutions exposed to the agricultural sector in Brazil must contribute to this fight against deforestation,” it said. BNP said the move was part of its commitment to encourage its customers

producing or buying beef or soya from the country’s Amazon and Cerrado regions to become ‘zero deforestation’. As a result, BNP said it would only provide its products or services to companies with a strategy to achieve zero deforestation in their production and supply chains by 2025. It would also encourage its clients not to produce or buy beef or soyabeans from cleared or converted land in the country’s Cerrado region after 1 January 2021. www.ofimagazine.com

18/03/2021 10:33:22

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NEWS

DFC calls halt to palm oil in cattle feed The Dairy Farmers of Canada (DFC) association is advising butter producers to temporarily stop adding palm oil additives to cattle feed following reports of butter becoming harder to melt, CBC News reported on 25 February. Gordon MacBeath, a member of the group’s board, said the DFC was responding to recent concerns about the hardening of some types of Canadian butter. The association also announced on 19 February that is was putting together a working group to study the issue of “fat supplementation in the dairy sector.” The group would include producers, processors, the Consumers Association of Canada, veterinary nutritionists and animal scientists.

“We want to err on the side of caution and we’re advising producers to just simply drop it as an ingredient in the ration until the working group has an opportunity to do its work,” said MacBeath. MacBeath explained that palm fat had been used as an energy supplement for cows for about a decade and no health issues for cows or changes to milk had been detected since its use. Palm fat was also used in cattle feed in Australia, New Zealand, the UK and the USA. Alejandro Marangoni, a food science professor at the University of Guelph, said while components of palm oil found in milk fat could affect the melting point of butter, there was no data to support the harden-

ing claims. There were many factors that could change from season to season and year to year that could affect milk products, MacBeath said, such as how weather conditions affected the grass eaten by cows. DFC noted that dairy cattle feed also varied from place to place due to differences in the type of feed available depending on what local farmers were growing. “While farmers grow the majority of the crops they feed their cows, a number of common feeds like flax, canola, corn and other plants have been used for decades in a targeted way to ensure cows are meeting their energy requirements,” a statement on the group’s website said.

Global agribusiness giant Cargill announced on 9 February that it had joined an alliance with organic research organisation Rodale Institute and chicken producer Bell & Evans to increase US production of certified-organic corn and soyabeans. The growth of Bell & Evans’ organic chicken business had led to an increased need for US-grown certified organic corn and soyabeans for use in its organic chicken feed, the company said. As a result, Bell & Evans had entered into a sourcing agreement with Cargill to exclusively secure its organic grain and increase domestic

IN BRIEF MALAYSIA: Futures and options exchange Bursa Malaysia Derivatives (BMD) has launched a revamped crude palm kernel oil futures (FPKO) contract, available to traders from 8 March. BMD CEO Samuel Ho said enhancements to the contract covered five areas including contract grade, delivery points, daily price limits, speculative position limits and the imposition of traceability document requirements. 6 OFI – MARCH/APRIL 2021

General News March.April.indd 3

Photo: Adobe Stock

Cargill joins organic soyabean and corn alliance

Cargill will encourage US farmers to convert land from conventional to organic soyabean and corn production

organic grain supply. Under the agreement, Cargill would encourage US farmers to convert land from conventional to

organic management through subsidised organic crop consulting services provided by the Rodale Institute.

The aim of the Bell & Evans Organic Grain Initiative was to convert 20,234ha of US corn and soyabean farmland to certified organic production over the next five years. Under the initiative, contracted growers would receive customised support to help them through the conversion, including on-farm consultation, organic system planning, certification assistance, crop rotation planning and inspection preparation. Cargill would offer market access for transition crops while farmers would be guaranteed a market for their certified organic grains through Bell & Evans.

Argentina probes consumer and food giants The Argentine government is investigating leading consumer and food companies over accusations they deliberately held back production amid a clampdown on rising prices, Reuters reported on 17 February. In a statement, the country’s production ministry alleged that the consumer firms – including Danone, Procter & Gamble and Unilever along with global agribusiness giants Bunge and others – had been “holding back production volumes” and had not abided by a resolution to

increase output to the “highest degree of their installed capacity”, Reuters wrote. An investigation had found shortages in supermarkets of products ranging from cooking oil to nappies and cheese and the production ministry called on the companies being investigated to rectify the situation and restore stock levels. The companies had not immediately responded to emailed requests for comment, Reuters said. However, Daniel Funes de

Rioja, the head of food industry chamber COPAL, rejected the allegations, saying that the industry had supplied the market despite high costs, price freezes, COVID, sick workers, logistical problems, striking oil workers, a truckers' blockade and plant shutdowns. The Argentine government was trying to protect consumers from rising prices and reduce rampant inflation, Reuters said, leading to clashes with some businesses and investors over price caps on some goods. www.ofimagazine.com

18/03/2021 10:33:26

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NEWS LATIN AMERICA: The Roundtable on Sustainable Palm Oil (RSPO) announced on 26 February that its Latin American members had produced 1.5M tonnes of Certified Sustainable Palm Oil (CSPO). The landmark figure was reached in February after four new grower companies received certification and added 160,000 tonnes of CSPO to help the region reach the 1.5M tonnes total. A total of 31 certified growers from Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras and Mexico produced the region’s CSPO output from over 420,500ha of certified land. BRAZIL: Global agribusiness giant Bunge has launched an initiative to share best practices with grain dealers on the traceability and monitoring of soyabean crops linked to its indirect supply chain in Brazil’s Cerrado region. Bunge said on 3 March that it would share its experience, methodologies and tools with partner dealers, who could adopt independent imaging services for verifying soyabean crops or use its geospatial monitoring structure at no cost. The group added that it had achieved 100% traceability for its direct soya purchases and it was expecting to reach 100% monitoring of its indirect soyabean purchases by 2025.

Leading chocolate giants face child slavery lawsuit Leading global chocolate companies Mars, Nestlé and Hershey are among the defendants facing a child slavery lawsuit in the USA, The Guardian reported on 12 February. Human rights firm International Rights Advocates (IRA) had filed the lawsuit in Washington DC on behalf of eight former alleged child slaves who claimed they had been forced to work without pay on cocoa plantations in Ivory Coast, the newspaper wrote. In the lawsuit, which also named Cargill, Barry Callebaut, Olam and Mondelēz, the eight children – all originally from Mali and now young adults – accused the corporations of aiding and abetting the illegal enslavement of “thousands” of children on cocoa farms in their supply chains.

A central allegation of the lawsuit was that the defendants, despite not owning the cocoa farms in question, “knowingly profited” from the illegal work of children, with contracted suppliers able to provide lower prices than if they had employed adult workers. Cargill said that while it could not comment on specifics of the case, "we have no tolerance for child labour in cocoa production”. Nestlé, Olam and Hershey also condemned child labour, while Barry Callebaut said it had committed to eradicating child labour from its supply chain by 2025. Ivory Coast produced about 45% of the global supply of cocoa which, along with cocoa butter, was a core ingredient in chocolate, The Guardian report said.

USA removes tariffs on Spanish olive oil

Photo: Adobe Stock

IN BRIEF

US tariffs on packaged Spanish olive oils have been temporarily lifted

A US 25% tariff on Spanish packaged olive oils has been lifted as part of a wider agreement between the USA and the EU to temporarily freeze retaliatory tariffs imposed during their ongoing Boeing/ Airbus subsidy dispute, Olive Oil Times reported on 5 March.

"US President Joe Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of four months,” European Commissioner Ursula von der Leyen said.

The move was welcomed by the Spanish olive oil sector, which had recently reported an 80% drop in 2020 sales of bottled olive oil to the USA compared with the previous year, Olive Oil Times wrote. Spanish Union of Small Farmers and Ranchers secretary general Cristóbal Cano said a lot of work would be required to recapture some of the market share that had been lost. In their long-running dispute, the USA and EU had accused each other of providing illegal subsidies to their respective aircraft manufacturers, Boeing and Airbus. This had led to retaliatory tariffs, including those on Spanish packaged virgin and non-virgin olive oils.

Lowest deforestation rate in three years but same culprits Rates of oil palm deforestation in Indonesia, Malaysia and Papua New Guinea in 2020 were at their lowest level for three years, according to a new report by Chain Reaction Research (CRR) published on 9 February. CRR detected approximately 38,000ha of deforestation on oil palm concessions in the region in 2020. This compared to 90,000 ha in 2019. The reduction in palm oil deforestation had been visible from the first half of 2020, 8 OFI – MARCH/APRIL 2021

General News March.April.indd 4

and could be attributed to Indonesia’s economic contraction and travel restrictions due to COVID-19, CRR said. Continued restrictions due to the pandemic in Indonesia and key export markets could explain the continued slow pace of deforestation in the third and fourth quarters of 2020, CRR said, although domestic demand and rallying palm oil prices could result in a rise in land development this year. CRR found that approximately 22,000ha

(58%) of deforestation could be attributed to 10 palm oil companies in Indonesia, with the remainder distributed between 112 other companies. Most of the 10 companies (Sulaidy, Ciliandry Anky Abadi, Bengalon Jaya Lestari, Mulia Sawit Agro Lestari (MSAL) Group, PT Permata Sawit Mandiri, IndoGunta, Jhonlin Group, Shanghai Xinjiu Chemical Co, Citra Borneo Indah (CBI) Group and Indonusa) were also listed in CRR’s 2019 and 2018 lists, CRR said. www.ofimagazine.com

18/03/2021 10:33:27

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BIOFUEL NEWS SINGAPORE/CHINA: The Singapore subsidiary of oil giant Royal Dutch Shell has signed a US$155M biodiesel supply deal with Chinese chemical product company Jiaao Enprotech, Yicai Global reported on 9 February. In the deal, Shell International Eastern Trading will buy a total of 150,000 tonnes of European Union-standard biodiesel fuel from the Chinese company over a three-year period starting from July, Yicai Global said. The contract was due to start when Jiaao Enprotech’s new biodiesel production line started operation, trebling the firm’s current 50,000 tonnes/year output. PARAGUAY: Biofuels producer ECB Group Paraguay announced on 26 January that it had signed a multiyear contract to supply global energy giant Shell with more than 2.5bn litres of renewable diesel and renewable jet fuel. Forecast to start in 2024, the contract would involve the supply of more than 500M litres/year of biofuels, ECB said. The renewable diesel (hydrotreated vegetable oil or HVO) and renewable jet fuel (synthetic paraffinic kerosene/SPK), also known as sustainable aviation fuel (SAF), would be produced at ECB’s planned Omega Green biorefinery in Paraguay.

BA planning flights with partially sustainable fuel Shell had produced 500 litres of the sustainable synthetic kerosene from CO₂ and water using renewable energy sources, the KLM statement said. In its statement, BA said the development and use of SAFs was a major focus for the company and formed part of its commitment to achieving net zero carbon emissions by 2050. The airline had an existing partnership with sustainable fuels technology company Velocys, with the goal of building a facility to convert household and commercial waste into SAF in the UK. BA’s parent company, International Airlines Group (IAG), would be investing US$400M in SAF in the next 20 years, the company said. “Progressing the development and commercial deployment of sustainable aviation fuel is crucial to decarbonising the aviation industry,” BA CEO Sean Doyle said.

UK airline British Airways is planning to operate transatlantic flights partially powered by sustainable aviation fuel (SAF) as early as next year, the company announced on 9 February. BA said it would be investing in a new plant in Georgia, USA, to be built by sustainable jet fuel company LanzaJet. The new facility would produce commercial-scale volumes of SAF made from ethanol derived from agricultural and other waste. The fuel would create 70% fewer carbon emissions than conventional jet fuel, BA said. Due to begin construction this year, the new Georgia plant would convert ethanol into SAF using a patented chemical process. Meanwhile, Dutch airline KLM announced on 8 February that it had used sustainable synthetic kerosene on a commercial flight from Amsterdam to Madrid.

Investancia in feedstock deal with ECB

Photo: Adobe Stock

IN BRIEF

The pongamia tree produces a legume related to soyabean which is high in protein and oil

Agroforestry and research company Investancia has signed a HVO feedstock deal with agro energy firm ECB Group that will involve the planting of 50M pongamia trees in Paraguay,

ECB Group announced on 23 February. ECB Group said the 30-year contract would involve the purchase of 300,000 tonnes/year of “reforestation oil” sourced from pongamia trees for use as a sustainable feedstock for its new Omega Green biorefinery. The pongamia trees will be produced by Dutch/Paraguayan firm Investancia at its research and development centre near Carmelo Peralta in the Paraguayan Chaco region. The site’s current 1M trees/year production capacity will increase to a total of 50M trees planted on 125,000ha over the next 10 years. The agreement would diversify the portfolio of raw materials used at the Omega Green biorefinery with lower carbon intensity solutions, said ECB Group CEO Erasmo Carlos Battistella. ECB Group’s new Omega Green biorefinery will be built in Villeta, Paraguay, and will have a total production capacity of 20,000 barrels/ day.

Pertamina plans green refinery operations by year end Indonesia’s state-owned energy company PT Pertamina is planning to start the production of diesel and jet fuel entirely from palm oil at its Cilacap refinery by the end of this year, Reuters reported on 6 March. The ‘green diesel’ produced at the facility would use 10 OFI – MARCH/APRIL 2021

Biofuel news March April GL draft.indd 2

refined, bleached and deodorised (RBD) palm oil, said senior Pertamina official Ifki Sukarya. The other product produced at the refinery – ‘green jet fuel” – would use RBD palm kernel oil. Pertamina was planning to process 3,000 barrels/day of

RBD palm oil to produce D100 biodiesel with the first stage due to start in December, Reuters wrote. By December 2022, the company aimed to process 6,000 barrels/day of crude palm oil to make biodiesel or jet fuel.

The green diesel and jet fuel production capacity at the refinery, on Java island, could be increased from 2023, Sukarya said. Trials for the biodiesel and jet fuel had started in January 2021 and December 2020 respectively, Reuters said. www.ofimagazine.com

17/03/2021 16:05:49

RENEWABLE NEWS

BASF signs two biosurfactant agreements German chemical and biotech giant BASF announced on 10 March that it had signed biosurfactant agreements with Japan-based Allied Carbon Solutions (ACS) and UKbased Holiferm for an undisclosed sum. The alliance with surfactants-from-biomass provider ACS includes an equity stake, making BASF the single largest shareholder. It also includes technology cooperation, commercial agreement and product development for sophorolipids, a class of glycolip-

USA/CANADA: Global speciality chemical and ingredient company Univar Solutions announced on 1 February that it had agreed to become the main distributor of Sasol Chemical’s alcohol and surfactant products in the USA and Canada. The deal expanded Univar’s portfolio to include Sasol’s ALFOL alcohols and ALFONIC, Novel and SAFOL surfactants for the home care and industrial cleaning, personal care, coatings, agriculture and energy markets. South Africa-based Sasol said the move would allow it to gain packaging and shipping efficiencies, reducing plastic use and fuel consumption. The firm supplies a portfolio of speciality chemicals for a wide range of applications and industries and is active in the Americas, Eurasia and southern Africa. BRAZIL: Braskem will expand its capacity to produce green ethylene, a raw material produced from sugarcane ethanol and used to produce renewable resins, Biofuels Digest reported on 24 February. The US$61M expansion project at Braskem’s industrial unit in Triunfo, Rio Grande do Sul, would increase capacity from the current 200,000 tonnes/ year, to 260,000 tonnes/year. Biofuels Digest said that work should start in 2021 and be completed fourth quarter 2022. 12 OFI – MARCH/APRIL 2021

Renewable news March.April.indd 2

additional bio-based products,” said BASF care chemicals president Ralph Schweens. In collaboration with ACS, BASF developed BioToLife, a novel sophorolipid-based ingredient produced via fermentation technology, for use in skin, scalp and oral care applications. The product was launched in Asia in the second quarter of 2020. BASF’s care chemicals division portfolio includes surfactants, emulsifiers, polymers, emollients and cosmetic ingredients.

EU cosmetics can use hemp-derived CBD The European Commission (EC) has added hemp-derived cannabidiol (CBD) to its cosmetic ingredient database CosIng, meaning that CBD derived from extracts, tinctures or resin of Cannabis sativa L (hemp) could now be used in cosmetics in the EU, Hemp Today reported on 2 February. The ruling followed a French case that went before the European Union Court of Justice in October 2020 in which the high court ruled that CBD could not be regarded as a narcotic and that CBD products should enjoy the same free movement of goods between and among member states as other legal products. The European Industrial Hemp Association (EIHA) welcomed the EC decision. “I feel like the legal clarity we are asking for is about to come,” EIHA managing direc-

Photo: Adobe Stock

IN BRIEF

ids. In the agreement with UK start-up company Holiferm, BASF will help develop and manufacture fermentation-derived ingredients for other classes of glycolipids with potential use in home care, industrial formulators and personal care products. “While BASF already has solid innovation and production capabilities for surfactants, we are always scouting for opportunities to work with partners well-rooted in technologies ... to expand our product portfolio with

Hemp-derived cannabidiol (CBD) can now be used in EU cosmetics

tor Lorenza Romanese said on 2 February. The EC’s CosIng database provides information on cosmetics substances and ingredients for member states and aims to harmonise the marketing of cosmetics prod-

ucts across Europe. CBD is one of the two most common compounds found in cannabis and does not contain any psychoactive properties. CBD demand for food, health and cosmetic applications has soared in recent years.

Go-ahead for new crude tall oil refineries Finnish crude tall oil (CTO) refiner Fintoil is going ahead with plans to invest US$121.6M in a new refinery in the Finnish port of HaminaKotka, Bioenergy International reported on 9 February. The company said it expected the 200,000 tonnes/year plant to start operations in mid2022. The plant would refine CTO to produce feedstock for second generation renewable diesel (HVO) and would use other fractions from its process to supply the chemicals, foodstuffs and pharmaceuticals industries, Bioenergy International said. CTO is a by-product of the Kraft wood pulp manufacture process and is a component in many chemicals including renewable diesel processing products, lubricants, adhesives and

others. It is classified as a sustainable feedstock for advanced biofuels in the EU’s Renewable Energy Directive (RED II). Flintoil said the climate footprint of CTO derivatives was up to 90% lower than its fossil counterparts, which meant its new biorefinery would bring a 400,000 tonne reduction – around 1% of Finland’s total emissions – in CO₂ emissions. In the USA, speciality chemicals firm Mainstream Pine Products is also planning to build a US$90M CTO biorefinery at the Charleston International Manufacturing Center in Berkeley county. The facility would have the capacity to process 110,000 tonnes of CTO and construction was expected to begin later this year, with operations starting in 2023, the company said on 26 January. www.ofimagazine.com

15/03/2021 14:46:03

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OFI – MARCH/APRIL 2021

TRANSPORT NEWS USA: Heavy snow in parts of southern USA disrupted logistics in the key export hub of the US Gulf, AgriCensus reported on 17 February. Key waterways such as the New Orleans and Houston shipping channels – major arrival ports for agricultural imports of bulk commodities including edible oils – were also disrupted. The extreme weather conditions sparked reports of forces majeures being declared in the region, AgriCensus wrote. A polar vortex had brought extreme low temperatures and heavy snow to large parts of Texas and along the New Orleans coast, hitting the primary US export hub. In 2019, the Port of New Orleans in Louisiana was one of the top three palm oil ports of entry in the USA and Houston was listed as one of the top 10, according to the WorldCity research group. USA: Greenfield Louisiana has filed permit applications to build a 36-silo grain terminal on the west bank of St John the Baptist Parish, World Grain reported on 8 March. The company expected to move more than 11M tonnes of agriculture products – mainly soyabeans, wheat and corn – through the 100ha export terminal. Products would mainly be transported via barge on the Mississippi River or the inland waterway system to the grain elevator, where they would be unloaded, stored, cleaned and then loaded onto an ocean-going vessel, World Grain said. If the project went ahead, the dock would be leased to Greenfield by the Port of South Louisiana, the USA’s largest grain port, which handled more than half of annual US grain exports. 14 OFI – MARCH/APRIL 2021

Transport news March.April.indd 2

Vopak expands storage in Rotterdam, Jakarta

Global tank storage company Royal Vopak announced on 17 February that it is investing in storage of waste-based feedstocks for the production of biofuels such as biodiesel and bio-jetfuel in the Port of Rotterdam, the Netherlands. The firm said the market for energy from renewable sources in Europe was rising, partly as a result of the EU’s Renewable Energy Directive II. “In total, 16 new tanks with a combined capacity of 64,000m3 will be built at Vopak Terminal Vlaardingen. The renewable feedstocks that can be stored in the new tanks are waste materials, such as used cooking oil and tallow.” Voapk said the terminal already had extensive experience in storing these types of products. Vopak also announced on 16 February that it

was expanding biofuel storage at the PT Jakarta Tank Terminal (JTT) in Tanjung Priok, Indonesia. Following the expansion, JTT – a joint venture between Vopak and PT AKR Corporindo (AKR) – would have a total tank capacity of more than 350,000m³. The expansion would add eight tanks to the facility with a total capacity of 100,000m³ for biodiesel, ethanol and gasoline, along with a vapour recovery unit and additional blending infrastructure. AKR has tank storage terminals in more than 15 sea and river ports in Indonesia handling petroleum products and basic chemicals. Vopak operates a global network of terminals handling products from oil, chemicals, gases and LNG to biofuels and vegetable oils.

New Cargill-Maersk bunker service Global agribusiness giant Cargill announced on 23 February that it is partnering with tanker company Maersk Tankers to provide a new bunker procurement service. Launching on 1 April, the partnership’s initial goal was to procure bunker fuel for Cargill and Maersk Tankers’ combined fleet, while aiming to attract additional customers in the near future, the company said. The partnership would offer a joint annual bunker volume of 3.5M tonnes by combining Cargill’s fleet of around 700 vessels, which procure 2.5M tonnes/year of marine fuels, with the volume from Maersk Tankers’ fleet of more than 220 product tankers. “As independent bunker

Photo: Maersk 2019 annual report

IN BRIEF

The Cargill-Maersk Tankers partnership will initially focus on procuring bunker fuel for the two companies’ combined fleet

consumers with no physical oil activity or bunker assets, there will be no conflicts of interest. We can therefore focus on providing transparency, robust benchmarking, and a modern and digital customer experi-

ence,” said Olivier Josse, head of tankers and marine fuel at Cargill Ocean Transportation. Cargill and Maersk have had a series of collaborations including the creation of a joint tankers pool in 2019.

Marine sulphur emissions fall from new rule The introduction of new sulphur limits in marine fuel led to a 70% drop in emissions from shipping, according to a statement by the International Maritime Organization (IMO) on 28 January. This drop in emissions was “testament to the preparations” all stakeholders had made prior to the rule coming into force, the IMO said. The IMO 2020

ruling reduced the amount of sulphur allowed in marine fuel oil from 3.5% to 0.5%. In 2020, there were only 55 reported cases of 0.5% compliant fuel not being available, a “remarkably low percentage” given the more than 60,000 ships which plied the world’s oceans in trade last year, IMO head of air pollution and energy efficiency Roel Hoenders said.

The IMO said the majority of ships had switched from using heavy fuel oil (HFO) to very low sulphur fuel oil (VLSFO). Some ships had also adopted exhaust gas cleaning systems (EGCS or ‘scrubbers’), allowing the continued use of HFO. Over 2,350 EGCS had also been reported to the IMO as an approved “equivalent method”, the organisation said. www.ofimagazine.com

15/03/2021 09:57:22

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OFI – MARCH/APRIL 2021

DIARY OF EVENTS New webinar on anaylsis OFI’s latest webinar on ‘Oil and Fat Analysis for Improved Yield and Quality Throughput the Food Chain’ will be held on Tuesday 20 April at 08:00 BST and is sponsored by Oxford OILS & FATS INTERNATIONAL Instruments, UK. Dr Kevin Nott, product manager and applications specialist at Oxford Instruments, will be speaking on how both time domain NMR (TD-NMR) and benchtop NMR spectroscopy are used to measure oils and fats throughout the food chain; from harvest through to manufacturing of ingredients and the food products themselves. “For example, fat content is an important parameter for quality assurance and control of snacks, confectionery and food ingredients,” he says. “Other TD-NMR measurables include the melting profile of edible oils/fats and droplet size in food emulsions such as dairy and non-dairy spreads.” Oxford says that benchtop NMR spectroscopy can quantify the proportion of saturated, monounsaturated, polyunsaturated and omega-3 fatty acids in a variety of foods. In addition, spectra can be used to distinguish and authenticate different vegetable oils and meats as well as test for Robusta in Arabica coffee. To register for the webinar, go to: https://quartz.adobeconnect.com/ oil-and-fat-analysis/event/event_info.html 7-9 April 2021

8-9 June 2021

Fundamentals of Oilseed Extraction and Oils & Fats Processing and Application Technology (Smart Short Courses) (Online) www.smartshortcourses.com/ oilprocess24/index.html

International Grains Virtual Conference (IGC) 2021 (Online) www.igc.int/en/conference/ confhome.aspx

14-15 April 2021 Black Sea Grain 2021 InterContinental Hotel, Kyiv, Ukraine https://ukragroconsult.com/en/ upcoming-conferences 3-14 May 2021 AOCS Annual Meeting & Expo (Online) https://annualmeeting.aocs.org

9-10 June 2021 Oleofuels 2021 Marseille, France www.wplgroup.com/aci/event/oleofuels 10-11 June 2021 Mineral Oil Contaminants in Food Berlin, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=10614 14-16 June 2021

27-29 May 2021 Grain & Maritime Days in Odessa Odessa, Ukraine https://www.apk-inform.com/en/ conferences/grainmaritime2021/about

Algal Biomass, Biofuels & Bioproducts (AlgalBBB) Online 2021 (Online) www.elsevier.com/events/conferences/ international-conference-on-algalbiomass-biofuels-and-bioproducts

27-29 May 2021

15-16 June 2021

Globoil India Taj Convention Centre, Goa, India www.globoilindia.com

OFIC 2021 Hotel Istana, Kuala Lumpur, Malaysia http://mosta.org.my/events/ofic-2021

2-5 June 2021

13-15 July 2021

EFPRA Congress 2021 Algarve, Portugal https://efpra2020algarve.com/frequentlyasked-questions/

Biodiesel & Renewable Diesel Summit Iowa Event Center, Iowa, USA http://2021.fuelethanolworkshop.com/ Biodiesel.html

Information correct at time of going to press For a full events list, visit: www.ofimagazine.com 16 OFI – MARCH/APRIL 2021

Diary March.April.indd 1

1-4 August 2020 Edible Oil/Products Processing Course College Station, Texas, USA https://fatsandoilsrnd.com/ annual-courses/ 2-3 September 2020 8th High Oleic Congress (Online) http://higholeicmarket.com/hoc-2019 22-23 September 2021 Future of Surfactants Summit North America Boston, Massachusetts, USA www.wplgroup.com/aci/event/ surfactants-summit-america/ 5-7 October 2021 Palmex Indonesia 2021 Medan, Indonesia http://palmoilexpo.com 5-7 October 2021 Plant Protein Science & Technology Forum Chicago, USA https://plantprotein.aocs.org/attend/ save-the-date-for-2021 17-20 October 2021 EuroFed Lipid Congress and Expo Leipzig, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=10713&sp_id=2 18-23 October 2021 North American Renderers Association Annual Convention 2021 Greensboro, Georgia, USA https://nara.org/about-us/events/ 19-20 October 2021 Biofuels International Conference & Expo Brussels, Belgium www.biofuels-news.com/conference/ biofuels/biofuels_index_2020.php 8-10 November 2021 AOCS Australasian Section Meeting Newcastle, Australia www.aocs.org/attend-meetings/ industry-events 9-10 November 2021 5th International Symposium ‘Dietary Fat and Health’ Frankfurt, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=9072 www.ofimagazine.com

17/03/2021 15:49:12

INTERNATIONAL MARKET REVIEW

More oil crops needed Vegetable oils have witnessed price rises for the past few months. Will supply be able to keep up with demand and how will producers respond? John Buckley

Low soyabean stocks

CBOT soya futures have reacted to the threat that stronger demand will tighten seasonal carryover stocks even more than expected, especially in the USA itself. Rain holding up a probable record soya harvest in Brazil has also supported the bullish move. Yields there may no longer be threatened by an earlier drought but quality might be and its stocks are unusually low after ‘over-selling’ the last crop, resulting in yet more importer demand switching back to the USA. The latter’s carryover stocks are arguably emerging as the main flashpoint, now forecast to plummet to just 3.25M tonnes by September from last year’s 14.3M tonnes and 2018/19’s 24.7M tonnes. The smallest stock since 2013/14 equals just 3.5% of demand, a worryingly low ratio. The global soyabean stock position is not much better – 83.4M tonnes at the close of 2020/21 would be the lowest since 2015/16’s 77.4M tonnes. World soya crush in 2015/16 was just 264M tonnes; this season, it is forecast to reach www.ofimagazine.com

John Buckley.indd 2

* Palm is refined Graph: John Buckley

Historic oilseed, oil and meal stock drawdowns during this marketing year remain the key driver of yet more, across-theboard price increases for the oils and fats complex in the opening months of 2021. Multi-year price highs (see Figure 1, right) have been further inflated by hopes that vaccination roll-outs will release the global economy from the shackles of COVID-19, recapturing the growth in food and transport fuel use of vegetable oils. Inflation fears have also helped stoke speculative interest in agricultural commodities. How far the boom continues will also depend heavily on producer response and, as always, that most unpredictable element – the weather. But for all the main feedstocks, the key question in coming months remains: can supply keep up with demand?

Figure 1: Crude vegetable oil prices at decade highs (US$/tonne, monthly averages) 322M tonnes. Soyabean futures, it might be noted, peaked in 2015/16 at around US$12/bushel. Recently, they went well past US$14. Overall this season, crushers in Europe are estimated to have paid about 38% more than in 2019/20 for their soyabeans while product prices are up by about 30% for oil and 44% for meal. By comparison, seasonal average sunflowerseed costs have jumped 54%, sunflower oil 51% and sunflower meal 44%. Rapeseed costs have risen by 17%, canola oil 23% and rapeseed meal 39%. Palm oil costs have also averaged about 42% more. Amid worryingly hot, dry weather, some Argentine private crop estimates have recently dropped as low as 44M tonnes versus the US Department of Agriculture (USDA)’s projection of 47.5M tonnes. Even if Brazil gets a record 130-135M tonnes crop, US farmers will need to at least match the big acreage increase expected of them this spring. The USDA’s recent annual Outlook Forum came up with a planted area forecast of around 90M acres (36.4M ha) versus last year’s 83.1M acres (33.6M ha). That could pave the way for a crop even larger than the two record 120M-plus harvests seen prior to 2019. Yet even that could indicate only modest easing in next season’s US carryout stocks. The snug supply outlook also suggests weather will remain at the front of market factors in coming weeks and months. Soya has also drawn support from firmer energy markets, helping CBOT oil futures hit a new multi-year peak of over US$1,200/tonne in March (see Figure 2,

p18). However, one downside risk factor not to rule out is the possibility that fresh outbreaks of African swine fever in China may spoil the largest soya consumer/ importer’s stated goal of a return to normal import demand by mid-year. The USDA has already trimmed its Chinese crush forecast from 99M to 98M tonnes.

Palm oil exports fall

Importers have recently shown signs of balking at increasingly expensive palm oil prices, which saw 13-year highs on Bursa Malaysia futures in March. It is a reminder that, for many developing countries, palm remains a choice based on value. At the same time, production may be on the road to recovery after COVID lockdowns, excessive wet weather and other seasonal factors resulting in months of output under-performing forecasts. January was a particularly depressing month for Malaysia, as its palm oil exports fell by a massive 42%, far more than production (down 15.5% on the month). All the big buyers – India, China, Europe, Pakistan – cut intake. February started more promisingly with hopes of a strong recovery ahead of the seasonal rise in consumption for Ramadan. However, trade deflated as the month wore on, finishing 5.5% down. Import declines were also seen by China (-26%) and Pakistan (-46%), putting their year-to-date imports down by 40% and 70% respectively. However, top buyer India’s February imports held steady. Malaysian exports to the EU also rose by 11% on the month but fell almost 38% on the year. That left Malaysia’s total u OFI – MARCH/APRIL 2021

18/03/2021 11:50:11

Figure 2: CBOT soyabean futures (US$/tonne) u January/February exports 20% lower than in the same period last year. Malaysia’s early March export data from cargo surveyors was not encouraging, showing a 22% on-the-month slump. However, some analysts thought that a weakening Malaysian ringgit versus the US dollar might revive trade in the second half of March. Some observers expected Indian importers to step up purchases amid improved processing margins. However, the high palm price was also reported to be encouraging India’s efforts to boost its own oilseed production by raising levies on palm oil imports. In early February, India was reported to have re-jigged taxes to apply an effective 30%-plus levy on crude palm oil, cutting the latter’s tax advantage over soya and sunflower oils from 8.25% to 2.75%, a move some Malaysian traders think could continue to cut demand for palm oil, especially for shipments from March onwards. Palm oil prices have weathered demand threats with support from the strength in other oils and from signs that energy market recoveries could feed into palm biofuel demand. Only a few months back, crude oil was languishing in the upper US$30s/barrel. Recently it has been well over US$60/barrel. Top palm oil supplier and consumer, Indonesia, has applied higher taxes on the oil to help subsidise its vast biodiesel programme.

Global rapeseed stocks plummet There has been no ascent in recent memory like that seen on this season’s rapeseed/canola chart. After several years apparently shrugging off slowing production and tightening stocks, the bellwether Winnipeg futures contract finally sprang to life with a near vertical upside move from C$500 at the start of 18 OFI – MARCH/APRIL 2021

John Buckley.indd 3

Figure 3: Winnipeg canola futures, 2015-2021 (C$/tonne)

2020/21 to over C$800/tonne recently (see Figure 3, above). Government body Agriculture Canada recently cut its estimate of the country’s end-season canola stock from an already low 1.2M tonnes to just 700,000 tonnes, a 77% drop. The Canadian Grain Commission noted that exports had risen by 35% for the year to date to nearly 6.4M tonnes. Domestic crush is also going much faster than expected and the revival in energy markets is offering support to rapeseed’s own large biodiesel sector. The EU is eking out its second disappointing crop (around 17M tonnes against 20.7M tonnes just two years back). With crush going stronger than expected (at a forecast 23.4M tonnes), EU ending stocks may fall to around 700,000800,000 tonnes or half the level of two years ago. Even with COVID curbing fuel usage, Europe is expected to need record rapeseed imports during 2020/21, with French analyst Strategie Grains raising its forecast for the bloc’s intake by 800,000 tonnes to 6.7M tonnes. Australia’s larger current crop (4M tonnes versus last year’s 2.33M tonnes) is expected to have to make a much larger contribution this season after a smaller than expected harvest from key supplier Ukraine, which has experienced some early-season drought problems. What could alter the balance next season is if Canadian farmers respond to these high prices with a larger than expected sown area. The 25% discount quoted on new crop November rapeseed futures in Winnipeg suggests the situation will loosen or that other oils – chiefly palm and soya – might be in improved supply by then. Some analysts also suggest the 2020 Canadian crop estimate might be revised up, as has often happened in the past.

Figures: John Buckley

INTERNATIONAL MARKET REVIEW

In terms of trade, strong Chinese imports of rapeseed oil were reportedly tightening the squeeze on supplies in mid-March when Winnipeg and Paris futures markets hit record highs. European crushers have been trying to fill some of the gaps in Chinese imports which have resulted from Beijing’s political spat with traditional top supplier Canada. As well as 130,000 tonnes of rapeseed oil already shipped, EU exporters have reportedly sold China another 200/300,000 tonnes. The USDA estimates that China’s 2020/21 imports will be 3M tonnes for rapeseed, and 1.8M tonnes for rapeseed oil.

Sunflower oil prices rise

Sunflower oil prices have continued their upward trajectory in the last few months, encouraged by increases in rival oils and dwindling stocks in the wake of last year’s disappointing crops in the former Soviet Union. Globally, production fell by about 4.75M tonnes from the record 2019/20 peak, reducing production of the oil by about 2M tonnes or 9%. Hopes will be pinned heavily on farmers responding to the increase in sunflower seed value – prices were recently as high as 60% over those seen this time last year. Last year, Ukrainian producers raised their sunflower planted area by a modest 2% but were thwarted by weather, which cut global average yields by some 11%. Recent Ukrainian export prices for sunflower oil rose to US$1,710-1,725/ tonne. Russian sunflower seed prices, meanwhile, hit record levels recently amid a strong rise in oil export values. As in Ukraine, Russia sowed more last year but yields fell, reducing the crop by almost 12% or 1.8M tonnes. ● John Buckley is OFI’s market correspondent www.ofimagazine.com

18/03/2021 11:50:11

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OFI – MARCH/APRIL 2021

A COVID success story Sales of soyabean oil expanded during the COVID-19 pandemic, with biodiesel use growing in the USA and imports increasing in key markets such as South Korea and India. Is this trend set to continue? Diana Yordanova With global markets and daily consumer habits disrupted for almost a year due to the ongoing global COVID-19 pandemic, some oils and fats sales have grown – and a key example is soyabean oil. This is true worldwide, from North and South America, to Africa, Asia, and Europe. In the USA, where soyabean oil has historically been the largest feedstock for biodiesel in volume and market share terms, this key use expanded still further in 2020. Figures from the US Energy Information Administration (EIA) show that in May 2020, 805M pounds of soyabeans were used as biodiesel feedstock; compared to 659M pounds in May 2019. COVID-19 lockdowns are the reason why. “Declining restaurant traffic and 20 OFI – MARCH/APRIL 2021

Soyabean oil 2 pages.indd 2

structurally lower demand in the HRI [hotel, restaurant, institutional food service] sector limited the availability of yellow grease or used cooking oil as a feedstock,” vice president of market intelligence for the United Soybean Board and the US Soybean Export Council (USSEC), Mac Marshall told Oils & Fats International. Waste oil collections were disrupted by the disease and meat plants – major suppliers of biodiesel feedstock – were shut down because of COVID outbreaks. “In the early stages of the pandemic, pork processing was operating at significantly reduced capacity, which limited the availability of white grease as a feedstock,” explains Marshall. William McNair, the director of oil and human proteins at the USSEC, adds that soyabean oil sales have also benefited from a positive reputation for health, especially as the pandemic prompted consumers to make healthy dietary choices. This trend has come as concerns rise over the environmental impact of palm oil, affecting its sales. As a result, soyabean oil prices have risen to levels not seen since 2014. In January 2021, the oil’s US sales price reached a record US$0.45/lb (453g) compared with US$0.24/lb in April 2020 when the coronavirus had started spreading, United States Department of Agriculture (USDA) statistics show.

Photo: United Soybean Board

SOYABEAN OIL

Looking at world soyabean oil demand, the US government reported that 59.6M tonnes were sold worldwide during the October 2019-September 2020 marketing year (MY), compared with 56.7M tonnes for the same period in the previous year. This has been good news for American producers. “Last season (MY2019/2020), the US exported record levels of soyabean oil, primarily to South Korea and throughout Central America,” says Marshall. “Domestically, 2020 was a record year for crush volumes and the production of oil has increased. “Through November 2020, US soyabean oil production is up 2.8% over 2019,” says Marshall. And sales may continue to rise, notes McNair, given that the US and European economies continue to be depressed by COVID-19 while other regions, notably in east Asia, have started living a relatively normal life, with standard consumer consumption.

Fluctuating market in China

The USSEC programme manager for human utilisation focusing on the ‘greater’ China region (including Taiwan), Jinrong Qian, confirms that tight supply has caused the Chinese soyabean oil market in 2020 to ﬂuctuate. In the early stage of the pandemic outbreak, China’s demand and imports u dropped. Demand for biodiesel was www.ofimagazine.com

17/03/2021 16:09:03

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OFI – MARCH/APRIL 2021

Photo: United Soybean Board

SOYABEAN OIL u depressed by low crude oil prices due to a price war between Saudi Arabia and Russia. “This hit soyabean oil and palm oil future prices hard,” she says. Delayed South American soyabean imports disrupted by COVID-19 further complicated the situation. “In addition, diplomatic pressures have also disrupted supplies, for instance between China and Canada, over the extradition hearings (at America’s request) in Vancouver of Meng Wanzhou, the CFO of Chinese tech giant Huawei,” says Qian. “As China and Canada are in an awkward relationship, rapeseed imports decreased significantly.” Despite the difficulties, the Chinese government claims it is now controlling the pandemic and is focusing on building up its own soyabean oil production, now approaching peak season. According to the Chinese office of USSEC, in 2020, the average price of China’s refined first-grade soyabean oil was CNY6,659 (US$1,035)/tonne, 15% up on 2019 prices.

Higher demand in South Korea

There is a similar story of increased demand for soyabean oil in South Korea, with imports increasing from 351,000 tonnes in 2019 to 391,000 tonnes in 2020, the USSEC country director for North Asia and Korea, Hyung Suk Lee, told Oils & Fats International. Similarly, South Korean soyabean crushing has also gone up from 1.26M tonnes in 2019 to 1.33M tonnes in 2020. As demand for delivered food and pre-cooked meals that only need to be reheated have been on the rise, mayonnaise production (a key soyabean oil consumer) has also increased, Hyung Suk Lee adds.

Indian imports rise

USSEC’s technical consultant for south Asia, Ratan Sharma, highlights that COVID-19 reduced restaurant capacity and restrictions on social gatherings continue to “keep the consumption levels of edible oils low” in India which “in turn will support the downward trend in their imports.” However, soyabean oils have bucked this trend in south Asia as well – with imports to India increasing by almost 10% to 3.4M tonnes for the past year, 300,000 tonnes more than in 2019.

Optimism in Argentina

Such increases in demand are, of course, good news for major soyabean exporters, such as Argentina, where the industry has kept up with expanding orders and is optimistic about future sales. 22 OFI – MARCH/APRIL 2021

Soyabean oil page 21.indd 3

‘During this pandemic, soyabean oil has been a consistent and reliable feedstock ’ The president of the Chamber of the Oils Industry of the Argentine Republic and the Cereal Exporters Center, Gustavo Idigoras, says that the sector reacted quickly once trading partners lifted any COVID 19-linked trade restrictions last year. Today, according to statistics from Idigoras, Argentina’s main worldwide buyer of its soyabean oil-based biodiesel is the EU, with an annual quota of 1.2M tonnes. India is also a crucial market for Argentine soyabean oil, with annual purchases usually exceeding 1.5M tonnes. “Currently the international soyabean market is experiencing good prices, sustained by Chinese demand as well as from southeast Asian countries that are increasing their consumption of vegetable proteins. “Argentina is the world’s leading exporter of soyabean oil and meal, and is therefore in a position to promote itself in this growing market,” Idigoras stresses.

Soyabean crush up in Europe

Other producers are benefiting and this includes those in Europe. Statistics from FEDIOL, the EU vegetable oil and protein meal industry association, show that soyabean crush volumes in the EU (and the UK), increased from 13.7M tonnes in 2019 to 14.6M tonnes in 2020. FEDIOL director-general Nathalie Lecocq stresses that “the EU oilseeds processing sector is adaptive to market changes. In this case, it has responded to increased demand for soyabean meal in the EU, with increased soyabean crushing, thereby producing more soyabean oil.” Imports to Europe, however, have been steady. EU and UK imports of soyabean oil for 2019 were 1.2M tonnes, worth €833M ($1bn). For January-October 2020, (excluding the UK), imports totalled 958,000 tonnes, worth more than €677M (US$820M). A note from Polish agro-supplies company AGRO-V said in 2019-2020 that the volume of its imports of soyabean oil to Poland significantly increased – up to 33% of all imports handled by the company. But the proportion of trades covered by

deliveries to other EU countries decreased from 45% to 32% of its total sales, adds AGRO-V.

Future growth?

Will this general global expansion of soyabean oil production and sales continue, post-COVID? A majority of market commentators think it will, at least in the shorter term. “If the pandemic has taught us anything, it is the importance of ensuring continued supply throughout the value chain – and during this pandemic, soyabean oil has been a consistent and reliable feedstock,” says Marshall. His colleague, McNair, stresses that soyabean is a versatile crop, also used for meat production, alternative food (non-meat) products and animal feed – so demand is more reliable, encouraging largescale production. This will only be augmented by growing demand for soyabean oil as biodiesel feedstock. And demand for new high oleic soybean oil (HOSO) – with qualities competing with olive oil and offering an extended shelf life – is growing in the USA and Canada, where it is being considered by large fast-food chains. South Korea’s soyabean oil consumption forecasts for 2021 are also positive, says Hyung Suk Lee. And Idigoras stresses that Argentina has sufficient crushing capacity to increase production and exports as internal consumption remains rather low. His country is “in a position to compete in the scenario of better prices and higher demands.” Ratan Sharma is less bullish about demand in India, which will depend on how well the government contains COVID-19. In Europe, however, regulatory issues might restrain biodiesel-based consumption. The revised EU Renewable Energy Directive (RED II) is restricting the manufacture of biofuels from food and feed crops, including soyabean-based biodiesel. And with the directive under review again through the European Green Deal programme of the current European Commission (EC), regulatory controls may tighten further. In October 2020, the European Parliament called on the EC to prohibit products that contribute to the destruction of forests, explicitly mentioning soya. But whether such measures have an impact on soyabean oil trade in Europe remains to be seen. Today, soyabean oil prices are still climbing and demand is robust – it would be a good bet that this market will continue to grow worldwide. ● Diana Yordanova is a freelance journalist

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18/03/2021 08:43:47

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OFI – MARCH/APRIL 2021

PLANT & TECHNOLOGY

Global round-up of projects

IN BRIEF BRAZIL: State-run oil company Petrobras has completed negotiations to sell its 50% stake in local biodiesel plants operator BSBios for around US$60.18M, the company announced on 23 December. The oil giant’s wholly-owned unit Petrobras Biocombustivel SA (PBio) held talks on the matter with RP Participacoes em Biocombustiveis SA. Closure was subject to approval by PBio’s shareholders, Petrobras said. Petrobras said the move was in line with its strategy to focus its resources on deep and ultra-deep waters. BSBios owned two biodiesel plants – the Passo Fundo facility, in the state of Rio Grande do Sul, and the Marialva plant, in the state of Paraná, according to Petrobras. Founded in 2011, RP Participações em Biocombustíveis SA’s main activity was to participate and invest in companies producing and selling biofuels, according to Petrobras.

GEA supplies olive oil mill and optimises edible oil production German food processing technology supplier GEA has supplied extraction lines for a new olive oil mill in Portugal, as well as optimised production at Ukrainian edible oil refining company Oliyar. The new Olibest facility in Portugal’s Alentejo region comprises a modern processing plant with a capacity of up to 1.5Mkg/day of olives, GEA said on 25 January. GEA’s contract included the supply and installation of five complete extraction lines and GEA pumps, hammer mills, malaxers and vibrating screens. On each line, GEA oil extraction decanters will process up to 400 tonnes/day and GEA separators will polish the olive oil at a rate of 3,000 litres/hour. The new mill was scheduled to start operation in the 2021/22 season, the company said. “We’ve carried out several major projects in Portugal already and have been working successfully with Alvaro Labella in olive oil production for more than 10 years,” said GEA Iberia’s separation & flow technologies division senior director Pedro Munoz.

Photo: Oliyar

Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world

Leading Ukrainian vegetable oil producer commissioned GEA to increase production and improve productivity and oil quality

Optimising production in Ukraine

In Ukraine, edible oil refining company Oliyar partnered with GEA on a project to increase its production of sunflower and rapeseed oils. The project’s aims were to improve oil quality, increase productivity and reduce fixed costs. Although a two-stage line was the standard solution for a process line handling water and special degumming, GEA designed a one-stage solution to meet the project’s specifications. “GEA has designed the new refining process exactly to our needs and specifications with the result that we can now handle both water degumming and special degumming in one stage,” explained Oliyar production manager Taras Tsybuh. “Processing edible oil is tricky because as

a natural product, it may have varying compositions, particularly the composition of the undesirable components,” GEA said. “If the separator cannot adapt to these variations, the separation result, and the oil quality and yield, decreases. GEA RSI separators come with a feature that allows customers to adjust their separator settings during processing.” The RSI separators also featured a drive system flanged directly to the spindle transmitting power without any support systems such as gears or belts, resulting in energy savings as well as less maintenance stress and down time. GEA separators also featured a hydraulic opening and closing mechanism and a hydrohermetic feed system, which used the product itself to seal the processing area, therefore requring fewer wear parts. The Oliyar project was commissioned last July and Tsybuh said the outcome had “exceeded expectations with both throughput capacity and separation achieving better results than promised in the original KPIs”.

NextChem and Essential Energy in South American project deal Maire Tecnimont subsidiary NextChem announced on 15 February that it had signed an agreement with biofuels producer Essential Energy USA to build a renewable diesel facility in South America. Due to start operation in 2023, the biorefinery would produce 200,000 tonnes/year of renewable diesel from advanced bio-feedstocks, the company said. 2 OFI 2018 2021 24 OFI––MONTH MARCH/APRIL

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The biorefinery would process natural oil, waste vegetable oils and tallow into hydrogenated vegetable oils (HVO). “Our business in the biofuels sector and in particular on the renewable diesel segment is gradually growing and South America is a very interesting area for us,” said Maire Tecnimont Group and NextChem CEO Pierroberto Folgiero.

Maire Tecnimont heads an industrial group which is active in the global natural resource conversion market and operates in 45 countries through 50 companies. Its subsidiary NextChem operates in the green chemicals and technologies sector in support of the energy transition. Essential Energy USA is a leading biofuels producer in South America. www.ofimagazine.com www.ofimagazine.com

22/03/2021 11:42:46

PLANT & TECHNOLOGY

Go-ahead for Diamond Green Diesel plant US renewable producer Diamond Green Diesel (DGD) – a 50/50 joint venture between Darling Ingredients and Valero Energy Corporation – has received approval to begin construction of a renewable diesel plant in Port Arthur, Texas, Nasdaq reported on 28 January. With an estimated capacity of around 1.7bn litres/year of renewable diesel, Nasdaq said the Port Arthur plant was expected to be operational in the second half of 2023. Once operational, and when

combined with the increased capacity at its Norco, Louisiana facility, DGD’s total annual production capacity was expected to be approximately 4.5bn litres of renewable diesel and 189M litres of renewable naphtha. Darling Ingredients is a leading renderer, and operates 200 processing plants on five continents. It converts beef, poultry and pork by-product streams into usable and speciality ingredients, such as gelatin, tallow, feed-grade fats, meat and bone meal, poultry meal, yellow grease, fuel feedstocks

and green energy, which are sold to the pharmaceutical, food, pet food, feed, fuel, bio-energy and fertiliser industries around the world. In North America, it provides used cooking oil collection and grease trap services to the restaurant industry. Valero Energy Corporation is an international manufacturer and marketer of transportation fuels and petrochemical products. It owns 15 petroleum refineries in the USA, Canada and the UK, and 14 ethanol process plants in the USA.

Preem renewable diesel output rises Swedish fuel company Preem announced on 21 January that it had increased production of renewable diesel by 40% at its Gothenburg plant. The Stockholm-based company is now also able to produce 100% renewable products at its green hydro treater (GHT) plant. Preem’s redevelopment of its Gothenburg facility was another step towards its goal of producing 5Mm3 of renewable fuels by 2030, the firm said. “Our goal means that we can reduce CO₂ emissions by 12.5M tonnes, which corresponds to 20% of Sweden’s total emissions,” said Preem CEO Magnus Heimburg. The Gothenburg plant sources a range of sustainable renewable raw materials including raw tall oil diesel, food

Preem’s redevelopment of its Gothenburg plant has increased its renewable diesel production by 40% Photo: Preem

residues and recycled frying oil. Preem has two refineries in Sweden – Preemraff Göteborg in Gothenburg and Preemraff Lysekil near Lysekil – with a

total refining capacity of more than 18Mm3 /year. The company exports its products globally, mainly to northwestern Europe.

CVR Energy to revamp Oklahoma refinery US petroleum refining company CVR Energy is planning to convert its Oklahoma refinery to renewable diesel production using Haldor Topsøe’s HydroFlex technology. Haldor Topsøe said it would deliver basic engineering, license, proprietary equipment and catalyst for its HydroFlex technology at the 378M litres/year renewable diesel plant. Construction work had begun on the US$110M project and was scheduled to be completed in July 2021, Haldor Topsøe said on 27 January. The project would convert an existing hydrocracker for the production of low-carbon renewable diesel from soyabean oil with the resulting fuel expected to meet the ASTM D975 diesel specification. “By leveraging assets already in place, parwww.ofimagazine.com

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ticularly the existing hydrocracker unit and under-utilised hydrogen plant at our Wynnewood refinery, we believe we can deliver one of the lowest-cost renewable diesel projects in the industry,” CVR Energy CEO and president Dave Lamp said. CVR Energy is involved in the petroleum refining and marketing business through its interest in CVR Refining. The Oklahoma announcement followed a report by Reuters in November 2020 saying that CVR Energy was planning a renewable diesel project at its Kansas site. Designed for renewable jet fuel and diesel production, Denmark’s Haldor Topsøe said its HydroFlex technology could be used in grassroots units and revamps for co-processing or stand-alone applications.

IN BRIEF FRANCE: French oil giant Total has partnered with energy firm Engie to build and operate a renewable hydrogen production site in France to support production of biofuel, the companies announced on 13 January. Located within Total’s La Mède biorefinery, the Masshylia project at Châteauneuf-les-Martigues will be powered by solar farms. Total said its 40MW electrolyser would produce five tonnes/day of green hydrogen for use in the biofuel production process at La Mède. The 500,000 tonnes/ year biorefinery started up production in 2019 and produces hydrotreated vegetable oil. CANADA: German industrial group thyssenkrupp has installed a green hydrogen plant for use in the production of biofuels from residual waste at a facility owned by Canadian energy company Hydro-Québec. Built in Varennes, Quebec, the water electrolysis plant would produce 11,100 tonnes/year of green hydrogen, the company said. Both the hydrogen and oxygen – a by-product of the electrolysis process – would be used in the facility to produce biofuels for the transport sector. Commissioning of the 88MW plant is scheduled for late 2023. OFI – MARCH/APRIL 2021

22/03/2021 11:42:53

OLEOCHEMICALS

Glycerine demand to make hand sanitisers led to price rises in March-May last year

Southeast Asia accounts for 80% of natural fatty acids and fatty alcohol production and the region is also a major consumer of oleochemicals Jackie Wong Southeast Asia produces around 80% of the world’s natural fatty acids and fatty alcohols and these products usually track the prices of palm oil closely. Both markets face chronic overcapacity with new complexes expected to come on stream this year. In terms of demand, China is the biggest consumer of fatty acids, taking some 30% of global output, while the Asia Pacific region consumes about 35% of world fatty alcohols production. Growth for both sectors is mostly driven by developing economies, chiefly in Southeast Asia and countries such as Indonesia and Thailand.

Looking at the demand segments for fatty acids and fatty alcohols, detergents, cleaners and soaps comprise the largest share. These account for about 48% of fatty acids demand and 55% of fatty alcohols demand (see Figure 1, below).

Photo: Adobe Stock

Supply and demand drivers sales and putting further pressure on fatty acid prices. Some new capacities expected to come on stream this year will also put supply pressure on the market. However, firming palm oil prices and some recovery in sectors such as the automotive industry should help boost demand for fatty acids.

Fatty acids

In 2020, the fatty acids market came under pressure due to sluggish demand. In particular, demand for stearic acids was signficantly hit by the COVID-19 pandemic due to weak downstream sectors such as industrial lubricants and tyres. In addition, the margins for short chain fatty acids which usually provide high value for producers have been corroded in recent years. This has put a lot of pressure on suppliers to secure better margins for their main products, such as C12 lauric acids. In 2020, producers tried to offset the lack of demand and margin for stearic acids by increasing prices for palmitic acids. Slow demand was set to continue to put pressure on prices, with a second pandemic wave affecting end product

Fatty alcohols

Fatty alcohols fared better in 2020 because the majority of these go into the making of household and personal care products. In late March to early May 2020, the market saw a surge in demand for fatty alcohols as a result of the COVID pandemic leading to increased demand for sanitisation and hygiene products. Demand for fatty alcohols was relatively stable for most of 2020, with some slowdown in the third quarter as end product sales were as good as early projections suggested. Demand for C18 single cut alcohols also slowed later in 2020 due to a seasonal lull. C10 alcohols also gained some support in terms of pricing from stronger demand and tighter supply. Going forward, fatty alcohol prices are expected to remain supported by tight feedstock supply and firm palm oil prices.

Figure 1: Fatty acids and fatty alcohols demand 26 OFI – MARCH/APRIL 2021

oleochemicals.indd 2

Source: ICIS

Palm oil prices

Palm oil is a major feedstock for fatty acids and fatty alcohols and 2020 was an atypical year for the crop. Prices were firm, even in the peak harvest season of July to October, which should have seen production increase and pressure on prices. Instead, palm oil u prices went on a general upward trend

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17/03/2021 11:49:26

BIODIESEL Options to purify feedstock } Acid Degumming } Fatty Acid Stripping } Nano Neutralisation Options to utilize high FFA feedstocks } Acid Esterification } Glycerolysis } Esterified Product Neutralization

In more than 40 years, Desmet Ballestra has installed over 400 oleochemical and biodiesel plants worldwide

Biodiesel Plant } Oil Drying } Transesterification } Glycerine Separation } Methyl Ester Washing } Methyl Ester Drying } Glycerine Purification } Glycerine Concentration } Methanol Rectification Options to further enhance biodiesel quality } Methyl Ester Prewashing } Methyl Ester Clarification } Methyl Ester Distillation Option to further enhance glycerine quality } Glycerine Distillation

OLEOCHEMICALS Fatty Acid Processing Plant } Fat Splitting } Fatty Acid Distillation } Fatty Acid Fractional Distillation } Fatty acid Hydrogenation } Fatty Acid Dry Fractionation } Sweetwater Treatment } Sweetwater Concentration } Glycerine Distillation Fatty Alcohols (Johnson Matthey Davy Technologies) } Fatty Acids Esterification } Methyl Ester Hydrogenation } Fatty Alcohol Refining } Fatty Alcohol Post Hydrogenation } Fatty Alcohol Fractional Distillation Fatty Acids Methyl Ester Process Plants } Methyl Ester Fractional Distillation } Methyl Ester Hydrogenation

Oleochemicals & Biodiesel

Science behind Technology

OLEOCHEMICALS CUT C8 caprylic acid C10 capric acid C12 lauric acid C14 myristic acid C16 palmitic acid

CUT C8-C10 alcohols

APPLICATIONS Perfumes, lubricants, plasticisers, surfactants

C12-14 alcohols

Surfactants, food, cosmetics

C16 alcohol Emulsifiers, cosmetics, thickening agents

Figure 2: Applications of fatty acid and fatty alcohol cuts

Source: ICIS

C18 alcohol Emulsifiers, cosmetics, thickening agents antioxidants

Figure 3: Spread between C12-14 alcohols and PKO prices (US$/tonne) Personal care, food and pharmaceuticals account for 47% of applications

Epichlorohydrin is the second largest segment 14%

Others 8% Other Americas, 5%

Pharmaceutical 9%

Asia accounts for 47% of global demand

Propylene glycol 4%

Figure 4: Refined glycerine demand by application and region

Majority of glycerine supply comes from biodiesel sector

Fatty alcohols 6% Soap 3%

Figure 5: Glycerine supply by industry 28 OFI – MARCH/APRIL 2021

u as production was affected by labour shortages due to COVID movement restrictions and adverse weather conditions resulting from the La Niña weather pattern. Last year, the price spread between C12-C14 fatty alcohols and palm kernel oil (PKO) was healthy due to strong demand for personal care and household care products (see Figure 3, above). Supply remained relatively tight due to some planned and unplanned turarounds. For C12 lauric acids, the spread stopped and skewed. A typical healthy range is US$150-200/tonne but across the year, the spread dipped below this healthy level at certain points.

Source: ICIS - market sources

Biodiesel, 62%

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China, 31% is the biggest consumer

Source: ICIS - market sources

C18 rubber grade stearic acid (RGSA)

Photo: Adobe Stock

Glycerine

Source: ICIS, Matthes and Porton

C18 oleic acid C18 triple pressed stearic acid (TPSA)

APPLICATIONS Lubricants, cosmetics, perfumes pesticides, disinfectants, fungicides Surfactants, cosmetics, personal care products, pharmaceuticals Surfactants, cosmetics, personal care Soaps, detergents, cosmetics, food animal feed Food, soaps, pharmaceuticals, emulsifiers Food, lubricants, metal working fluids personal care products, plastics, pharmaceuticals, rubber, surfactants Rubber, candles, cosmetics, soaps

Glycerine is a by-product of biodiesel and oleochemical production, which means that its supply and price are driven by the run rates of plants in these two sectors. Glycerine output is typically about 10% of the nameplate capacity of both processes. Around 3.3M tonnes of glycerine is consumed annually and the biggest consumer is the Asia region, which accounts for around 47% of global demand (see Figure 4, below left). China alone accounts for 30% of world demand, which is expected to grow at a stable rate of 6%/year, although this figure may be lower in 2020 due to COVID slowdowns. The majority of refined glycerine demand is from the food and pharmaceutical sectors, which accounted for 47% of demand. The next biggest sector is the epichlorohydrin (ECH) sector, at 14%. The majority of global glycerine supply (62%) comes from the biodiesel sector (see Figure 5, below), followed by oleochemicals. In the oleochemical route, most glycerine is outputted as refined glycerine while, for the biodiesel sector, a fair amount is sold as crude glycerine. From late March to May 2020, glycerine prices rose significantly due to buyers from the personal care sector wanting to secure feedstock to produce hand sanitiser. In addition, the implementation of movement control measures in South Asia, Europe and Latin America meant biodiesel production and consumption was lower. From June onwards, however, glycerine prices started to soften due to the recovery of biodiesel production and technical grade glycerine users finding it harder to absorb increasing costs. For example, a bottle of hand sanitiser usually contains 2-3% glycerine, while an ECH producer needs to use 1.2 tonnes of glycerine to produce one tonne of ECH. This means increased glycerine prices are much costlier for technical grade users. ECH is traditionally produced from petrochemical feedstocks (propylene) but glycerine is slowly replacing propylene. The main application for ECH is epoxy resin, which is used in a wide variety of applications including paints, electronics, construction, composites and adhesives. Good margins for ECH producers in China should see glycerine demand from the country remain strong. In the long term, glycerine prices will face pressure from increased biodiesel production, due to aggressive blending mandates in countries such as Indonesia, Malaysia, Brazil and Thailand. Glycerine output as a result of biodiesel production in Indonesia, Brazil and

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17/03/2021 11:49:32

Asia accoun

Malaysia in 2019 was around 1.3M tonnes (see Figure 6, right). In 2020, their projected glycerine output was 1.75M tonnes, before COVID-19 struck. In the future, if Indonesia moves to a B50 biodiesel blending mandate, its glycerine output would rise from 640,000 tonnes currently, to 1.7M tonnes. For Brazil, a move from B11 to B15 would increase glycerine production from 580,000 tonnes to 850,000 tonnes. While in Malaysia, a move from B10 to B30 would increase glycerine production from 76,000 tonnes to 125,000 tonnes. In total, if all blending mandates were implemented, the output from these three countries alone would double glycerine output from 1.3M tonnes to 2.67M tonnes. In the future, the glycerine market will face pressure from significant increases

Source: ICIS

OLEOCHEMICALS

Figure 6: Effects of biodiesel mandates on glycerine output in supply from these aggressive mandate plans. However, as a result of the COVID pandemic, it is uncertain when these plans will resume and how long it will take to reach their targets. ●

Jackie Wong is senior editor at Independent Commodity Intelligence Services (ICIS). This article is based on a presentation he gave to the ICIS European & Asian Surfactants Virtual Conference on 10-11 November 2020

The pricing stories behind feedstocks

The pricing of products in the oleochemicals sector is complex and, at any time, there are factors that will push them up and pull them down, Martin Herrington, president, North America, IP Specialities, told the ICIS European & Asian Surfactants Virtual Conference last year. “The price that is agreed is largely the result of stories that are told to each other,” he said. Major feedstocks for oleochemical products are palm oil, lauric oils (palm kernel oil and coconut oil) and tallow.

Palm oil The production life of an oil palm tree is over 20 years and palm oil production results in four main products – empty fruit bunches, sludge, palm oil and palm kernel oil (PKO). Several effects come into play when it comes to palm oil prices, according to Herrington. These include the yield of trees, which is weather dependent, such as in El Niño or La Niña years. Then there is the effect of stock holding. “If producers don’t like the current price, they will store the oil and wait until prices are higher. However, if they have full tanks, then they must sell.” The price of fuel is also a major factor. “Palm oil is a major feedstock for biodiesel and can be burned as heating oil. The price of fuel is a floor for palm oil prices, under which they will not fall.” Lauric oils (C12-C14 chain length) PKO is a by-product of the oil palm milling process. www.ofimagazine.com

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“Producers plant for palm oil, not PKO,” Herrington said. “Therefore, prices for PKO are more volatile than for palm oil because if demand for PKO goes up, prices go up until somebody formulates out of it.” Coconut oil is technically similar to PKO and its pricing should be similar. However, the price of coconut oil partly depends on its ‘story’. Herrington said that in 2017, when coconut oil was touted as a cure for various diseases and ailments, the price differential between coconut oil and PKO reached US$400-1,000. When there were negative health stories in 2018, coconut oil prices went down.

Tallow Tallow is a by-product of beef processing. “It should be cheap unless it has more value than its primary product,” Herrington said. “However, low carbon fuel standards in California and the EU give more value to a by-product than the primary product because it has less CO2 emissions than the primary product.” Looking back at 2020, tallow prices were high at the start of the year because biodiesel production was strong. Then COVID-19 lockdowns hit, transportation was shut down, biodiesel production fell with less demand, and tallow prices slipped from US$0.36/pound to US$0.29/pound. Some meat packing plants – which provided ideal conditions for spreading coronavirus – shut down, leading to a fall in tallow production. With a shortage of tallow, prices went up. “However, animals were still being

slaughtered and carcasses were still sitting around. So in June, prices of high grade tallow went up while low grade tallow fell through the floor to US$0.29/pound.” Co-products and by-products In the oleochemicals market, it is important to make the distinction between “products of assembly” and “products of ‘disassembly’”, Herrington said. In products of assembly, the material cost is the sum of their ingredients. In products of ‘disassembly’, such as with oleochemicals, producers had to extract the parts they want and sell the other parts. “For example, if you want steak, you need to kill the cow and sell the other cuts of meat, tallow and leather. “If you want a tonne of C12-C14 fatty alcohol, you need 1.7 tonnes of PKO and 700kg of other material has to be sold. Your cost is 1.7 tonnes of PKO minus the by-product credits.” Glycerine is widely used in multiple applications but it is only a by-product. “No one sets out to make glycerine and price signals have no effect.” So when COVID hit last year and biodiesel production fell, so did the production of crude glycerine. “At the same time, personal care and pharmaceutical demand was strong as glycerine is an ingredient in hand sanitiser. In a few weeks in March/April, the price of glycerine doubled. Then everyone had filled their tanks and prices came down in May/June. In some parts of the world, prices doubled and halved in the space of 10 weeks.” OFI – MARCH/APRIL 2021

17/03/2021 11:49:35

CHINA The COVID-19 pandemic has had a negative impact on world trade and while the effects have been felt in China, the country has emerged from the crisis stronger than most other nations. Against this backdrop, what is the outlook for the country’s edible oil sector? Gill Langham China is poised to be the one major economy to register positive growth in 2020 following a turbulent period globally due to the ongoing COVID-19 pandemic. The country will overtake the USA as the world’s biggest economy before the end of the decade after outperforming its rival during the global crisis, according to a report by the Centre for Economics and Business Research (CEBR). In its annual World Economic League Table published on 26 December 2020, the UK-based consultancy group said China had bounced back quickly from the effects of COVID-19 and would grow by 2% in 2020. This was a view shared by Alan Jope, CEO of consumer goods giant Unilever, who was quoted by The Guardian as saying at a Reuters conference on 13 January that the pandemic would continue to disrupt European and American economies during the first half of 2021.However, he said east Asian economies such as China and Singapore – which had effectively suppressed viral outbreaks – were almost back to normal. Looking ahead, the CEBR said it expected China to average economic growth of 5.7% a year from 2021 to 2025 before slowing to 4.5% a year from 2026 to 2030.

Other factors

The US-China trade war also hit global economic growth and led to a reduction in China’s purchases of US soyabeans. Tensions between the two countries were heightened by China’s implementation of the new national security law (NSL) in Hong Kong. China’s handling of the initial outbreak of the pandemic in Wuhan was also questioned by the former Trump administration and alleged human rights abuses in western Xinjiang province provoked international criticism. 30 OFI – MARCH/APRIL 2021

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Post-pandemic re Although most commentators believed that US policy towards China would be less confrontational under the new Democratic president Joe Biden, relations were not expected to revert to their preTrump status.

Covid impact

China’s post-pandemic recovery and palm oil demand were the themes of a webinar organised by the Malaysian Palm Oil Council (MPOC) on 10 November 2020. During the webinar, Zhou Shiyong, from Beijing Heyirong Investment Group, spoke about the outlook for the oils and fats industry in China. “Due to the COVID-19 pandemic, there are still a lot of uncertainties in our market and this will definitely have a huge impact on the sector.” Despite the uncertainties in the industry, Zhou said there had been little impact on total consumption. However, from September 2020 there had been a change in consumption structure. “During the pandemic, most people stayed at home so that’s why there has been an increase in the small packaged oils sector,” he said. “We have more consumption in food and less consumption in industrial processes.”

The catering industry had started to recover in the latter half of 2020, explained Zhou. According to local media, the catering business had recovered well, especially in Shanghai, Beijing and Guangzhou. However, in small cities the recovery had not been as rapid. Looking ahead, Zhou said he was “quite optimistic” about the oils and fats industry in China in the first quarter of 2021.

Consumption patterns

The rapid development of China’s economy and its effect on living standards had been a catalyst in the growing consumption of edible vegetable oils, according to an MPOC report on 12 January 2021. According to the China Bureau of Statistics, the per capita edible vegetable oil consumption had increased from 7.7kg in 1996 to 9.8kg in 2019. Soyabean oil was the most consumed edible oil followed by palm oil, rapeseed oil and peanut oil. These four major oils accounted for around 90% of the total consumption in China. While the household consumer sector preferred rapeseed oil and soyabean oil, the commercial and food industry sector

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17/03/2021 16:36:21

CHINA

Photo: Adobe Stock

China has emerged in a stronger position from the COVID-19 pandemic crisis than most other nations and is poised to be the one major economy to register positive growth in 2020

c recovery used more palm oil. China is one of the biggest markets for palm oil in the world, with the product being widely used in the country’s food industry. In 2019, around 43% of the total palm oil imported by China was used in the food manufacturing process, 22% in oleochemical production and close to 13% in other sectors such as biodiesel and animal feed. Apart from the impact of COVID-19 on overall demand for oils and fats in the country, two other issues affected palm oil trade in China in 2020: a surge in soyabean imports as the hog industry recovered from the African Swine Fever (ASF) outbreak and diplomatic tension between China and Canada leading to a reduction in rapeseed imports. The recovery from ASF encouraged more soyabean crushing and the resultant increase in locally-produced soyabean oil reduced the spread between soyabean and palm oil, making the latter less competitive. Conversely, the reduction in rapeseed crushing and production had a favourable impact on palm oil imports. The fact that palm oil is hard to replace with an alternative also meant that sales held up. www.ofimagazine.com

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In the first three months of 2020, China’s palm oil imports rose from 371M tonnes in January to 526M tonnes in March, according to MPOC figures. Following the imposition of COVID lockdowns, starting with Wuhan on 23 January 2020, palm oil imports did not fall. However, palm oil importers were cautious due to concerns over importing more than the market needed. After the Chinese government gradually lifted the country’s movement control order on 8 April, palm oil imports started to rise from 328.4M tonnes in April to 587.6M tonnes in June. There was a fluctuation in monthly palm oil import volume in the July to September period although overall import volumes in all three quarters of 2020 remained high. However, despite strong demand for palm oil last year, exports to China in 2021 would be challenged due to lower prices of other oils versus palm oil, according to MPOC CEO Datuk Dr Kalyana Sundram speaking at the Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021) on 5 January.

Future outlook

China’s vegetable oil outlook and palm oil situation was covered in the MPOC report on 12 January. According to United States Department of Agriculture (USDA) data, total vegetable oil production for 2020/21 is forecast at 26.1M tonnes compared with 25.3M tonnes in 2019/20. The increase in hog production following recovery from ASF was the major driver for the increase. However, overall vegetable oil consumption was estimated to increase less than 1% compared to 2019 due to the COVID-19 outbreak, which took a toll on demand in the hotel, restaurants and catering (HORECA) sector in the first half of 2020, when consumers avoided eating out and stayed at home. Palm oil was expected to drop from 7.6M tonnes in 2019 to 6.4M tonnes in 2020. Meanwhile, China’s food processing industry, which primarily uses palm oil, was displaying a positive growth trend, according to the MPOC report. A steady recovery of instant noodle production which uses palm oil as one of its main ingredients had shown an 11.5% year-on-year increase in sales in 2020,

according to research by Nielsen. Palm oil is also widely blended with other oils in retail markets and restaurants due to its price advantage. Overall, MPOC said a drop in vegetable oil imports to China was inevitable due to the huge impact of the pandemic in the HORECA sector but the growth of other segments that used palm oil would cushion the impact of the drop in palm oil imports.

Soyabean consumption growth

An agricultural outlook report for 2020-2029 released by the Ministry of Agriculture and Rural Affairs said that China’s soyabean imports in 2020 were expected to reach 92.48M tonnes. Soyabean consumption in China was expected to grow steadily in the next decade and would continue to rely mainly on imports. The recovery of the livestock industry was a positive factor for the sector, according to Dr Wang Jun, founder of CIFCO Futures Research Institute, speaking at the MPOC webinar on 10 November 2020, and would drive an increase in demand for animal feed. As soyabeans were the main source of pig feed, Dr Wang said he was optimistic that demand would increase in 2021. A report by the International Grains Council (IGC) published on 11 January 2021 highlighted the outlook for the soyabean sector for the five years to 2025/26 and included information on the effects of the COVID-19 pandemic. Despite the negative impact of the pandemic on world economic activity, the IGC report said soyabean consumption was forecast to rise to a new peak in 2020/21 due to a growth in uptake of soya meal in China, tied to a recovery in pig herds and rising poultry output. A transition to large-scale industrialised pig farming had also boosted the use of high protein-based feeds, as opposed to traditional, smaller outfits which typically utilised food waste. However, with the IGC assuming pig stocks would be fully restored to pre-ASF levels in the early part of the forecast period, this growth might moderate moving forward. By 2025/26, the IGC expected China’s share of global import demand to remain steady at around 60%. ● Gill Langham is the assistant editor of OFI

OFI – MARCH/APRIL 2021

17/03/2021 16:36:22

STATISTICS

Lipsa February 2021 report/Reuters

STATISTICAL NEWS

Vegetable oil reference prices

Strong price rises in vegetable oils continued in February, driven by slower palm oil production recovery in Asia, a delayed soyabean harvest in Brazil, very dry weather in Argentina and tight sunflower oil availability in the Black Sea region, according to Lipsa’s February market report. Sunflower oil prices are at their highest level for nine years, due to a significant 5M tonnes sunflowerseed production loss (equivalent to 2M tonnes of oil) mainly in Ukraine and Russia, which represent more than 60% of global sunflowerseed production.

Palm oil production

Soyabean crops in top producing countries (million tonnes)

UFOP, USDA, AMI

Palm oil production – Indonesia, Malaysia, world (tonnes)

Lipsa February 2021 market report

A recovery in palm oil production is expected in late Q2/ early Q3 2021, mostly led by Indonesia, according to Lipsa’s February market report. China’s demand is expected to be better in Q1 than Q2 and slightly better for all of 2021. India has increased its oil stocks and CPO has lost competitiveness against other oils with the country’s new tariffs, although its imports are expected to grow in 2021 against the record low level in 2020. Europe is expected to import less CPO during 2021, Lipsa says.

Prices of selected oils (US$/tonne)

Mintec

Sep 20

Oct 20

Nov 20

Dec 20

Jan 21

Feb 21

Soyabean

872.4

869.1

946.9

1,001.7

1,053.2

1,075.1

Crude palm

740.7

752.9

855.6

918.4

915.9

974.0

Palm olein

723.1

723.2

811.8

873.6

875.1

911.6

1,037.5

1,105.8

1,396.2

1,491.5

1,458.2

1,435.0

Rapeseed

924.3

913.4

988.0

1,040.0

1,092.5

1,131.5

Sunflower

977.3

985.6

1,117.7

1,185.1

1,298.5

1,385.9

Palm kernel

818.8

830.7

1,104.9

1,246.5

1,345.2

1,335.7

Average

871.0

883.0

1,032.0

1,108.0

1,148.0

1,178.0

Index

206.0

209.0

244.0

263.0

272.0

279.0

Coconut

32 OFI – MARCH/APRIL 2021

Stats March.April.indd 1

Soyabean production in top producing countries

Brazil is set to harvest a record 133M tonnes of soyabeans in the current crop year, an increase of around 7M tonnes against last year, according to a US Department of Agriculture (USDA) report. Drought-related planting delays at the end of 2020 have caused delays in harvesting but are unlikely to lead to reductions in yields, the report says. Brazil has consolidated its number one soya position ahead of the USA based on a 1.7M ha expansion in planted area. The US soya harvest was completed at the beginning of November 2020, amounting to around 113M tonnes, a rise of 16M tonnes year-on-year. Third largest soyabean producer Argentina is expected to have a lower harvest for a second year running – at 48M tonnes – due to poor weather conditions, as well as lower yields, UFOP quoted the USDA report as saying. Brazil, the USA and Argentina produce more than 80% of the world’s soyabeans. Lipidos Santiaga (Lipsa), Spain, produces vegetable oils and fats for food, animal feed, technical and biofuel applications The Union for the Promotion of Oil and Protein Plants represents companies and associations involved in the production, processing and marketing of oil and protein plants in Germany Mintec provides independent insight and data to help companies make informed commercial decisions. Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com

www.ofimagazine.com

17/03/2021 17:24:58

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OFI March/April 2021

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