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Presentation to PIPOC Oleochemicals Conference 2011 by Alan Brunskill, Senior Oleochemical Consultant, LMC International KL Conference Centre, 15th November 2011, Kuala Lumpur, Malaysia
Agenda
Capacity Capacity ownership Market Growth Major Issues Biofuels, Taxes/Duties etc, Economy, Sustainability Whats next?
9 8 7
Million Tonnes
6 5 4 3 2 1 0 2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
North America
E urope
Rest of Asia
S outh America
9 8 7
Million Tonnes
6 5 4 3 2 1 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 North America E urope S outh E Asia ast Rest of Asia S outh America Rest of the World
Million Tonnes
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
North America
E urope
Rest of Asia
S outh America
Million Tonnes
2.5 2.0 1.5 1.0 0.5 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 North America E urope S outh E Asia ast Rest of Asia S outh America Rest of the World
Capacity Ownership
% Capacity owned by raw material producers Fatty acids 60
The Economy
Bankers one way risks only: they get the bonuses, tax payers/investors pay the penalty Politicians no business experience. Yet we elect them to run our countries Economists only have hindsight Auditors/Ratings Agencies never spot the big problems
Glycerine price/availablility
Raw material availability
26 24 22 20 18
Million Tonnes
16 14 12 10 8 6 4 2 0 1995 1998 North America India 2001 E urope Other Asia 2004 S outh E Asia ast S outh America 2007 China Rest of the World 2010
Until 2006, year-on-year changes in CPO prices used to be fairly easily explained in terms of MPOB stock changes.
750
625 500 375 250 125 0 -125 -250 -375 -500 Jan-06
Jan-02
Jan-04
Jan-05
Stock Change
1,600 1,200 800 400 0 -400 -800 -1,200 -1,600 -2,000 Jan-01
Brent nominal crude prices plotted against ethylene, US$ per tonne
1,750
100
1,500
85
1,250
70
$ US per tonne
1,000
55
750
40
500
25
250
10
0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
-5
E thylene
Brent crude
Biodiesel use in Germany and the US, reacts quickly to swings in the biodiesel premium over diesel. This links biodiesel to diesel prices.
500
300 250 200 150 100 50 0 -50 -100 Jan-09 Jan-10 Jan-11 Average US & German Biodiesel Premium
460 420 380 340 300 260 220 180 Jan-07 Jan-08 US + German Demand
1,750 1,500 1,250 1,000 750 500 250 0 Jan-06 Brent Crude
Jan-08 Olein
Jan-09 Tallow
Jan-10 Stearin
Jan-11 PFAD
In the EU biodiesel market, used cooking oil methyl ester is now by far the most expensive, with tallow ME just ahead of rapeseed ME.
1,800
1,600
US$/tonne
1,400
1,200
1,000
Mar-11 Tallow ME
Sep-11 UCOME
9 8 7
Million Tonnes
6 5 4 3 2 1 0 2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
North America
E urope
Rest of Asia
S outh America
The biodiesel production growth has kept crude glycerine prices in check, when other commodity prices have been strong.
1,400 1,200
1998
2000
2002
2004
2006 EU CPO
2008
2010
EU Crude Glycerine
Refined glycerine has settled at a premium of over $400 above crude glycerine prices, and have now fallen well below CPO prices.
2,000 1,800
1998
2000
2002
2004
2006
2008
2010
EU Crude Glycerine
EU CPO
The new Indonesian export tax system has reduced the export taxes on RBD palm stearin by approximately half
25%
20%
15%
10%
5%
At the same time, the Indonesian government has introduced relatively high export taxes on PFAD, after a long period with no such taxes
25%
20%
15%
10%
5%
Sustainability Issues
Land use, Raw materials, Pipeline, Storage, Traceability, etc. But does the ultimate consumer really want it? NO, the ultimate consumer wants no more deforestation and safe raw materials, doesnt care about the rest and certainly doesnt want to pay for it For oleochemicals the danger is being hijacked by the edible/biofuel industry problems
Whats next?
Geographic expansion? - Indonesia, China, India, South America Contraction? US, Europe Downstream activities? - surfactants, consumer products. Green chemistry - new ways of making chemicals from natural sources.
Acknowledgements: LMC International, Oleoline/HBI, Industry Players; Biofuels Digest; BIO; Biorefining Week; Benson Ford Research Center; & ICIS