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Is a ‘black box’ agency hindering the outlook on US crude, condensate exports?

When the Obama administration gave legal backing to exports of processed condensate exports last year, it fueled speculation that a more significant shift in US crude export policy was looming and that US producers may have found a new global export market to conquer.

Much of that speculation has, thus far, fallen flat.

The administration has signaled that it will not move to liberalize long-standing restrictions on crude exports nor will it back efforts by Congress to repeal these roughly 40-year-old limits, despite a fierce lobbying push to do so.

At the same time, infrastructure constraints, tight spreads and even contractual obligations from producers may have slowed the growth of the US processed condensate market, which may have peaked at an estimated 160,000 b/d in June and fell to as low as 30,000 b/d in September.

According to Stuart Nance, a vice president of marketing with Reliance, a Houston-based E&P company, that decline has been fueled by low crude oil prices, which have pushed Eagle Ford condensate production down by about 200,000 b/d, and a tightening of the WTI-Brent and LLS-Brent spread to about $3/b. At the same time, the construction of three new Gulf Coast splitters has boosted domestic demand for condensate, Nance said.

In short, the relatively underwhelming launch of the US processed condensate export market has not matched the initial hype.

And while the state of the condensate export market can be primarily pinned on market fundamentals, the lack of clarity and relative secrecy from the agency charged with US crude and condensate exports may also bear some of the blame as industry expectations are reset.

That agency, the US Department of Commerce’s Bureau of Industry and Security, is often described by analysts and attorneys as a “black box” due to its national security considerations in export control.

BIS, which is charged with issuing crude export licenses, rarely publicly discusses its process for approving such applications and never comments on specific crude or condensate export applications it may be considering or even the details of applications it may have approved.

This regulatory secrecy can create a real lack of clarity and even confusion when it comes to determining if a policy shift may be in the works or if US producers are even formally pressing for more access to the world market.

For example, in August, a Commerce official said in a carefully worded statement that the agency planned to issue licenses for the exchange of heavier Mexican crude for lighter US oil, while at the same time denying swaps to Asian and European countries.

But last month, Senator Lisa Murkowski, an Alaska Republican and chairwoman of the Senate Energy and Natural Resources Committee, wrote in a letter to Commerce that there was “conflicting information” about these exchanges and said it remains unclear if any swaps with Mexico had been approved by Commerce.

About a week later, Mexico’s Pemex said in a statement that Commerce had granted it a license to import 75,000 b/d of light crude for a year beginning in October in exchange for heavy Mexican crude, which US refineries are better able to process. Commerce declined to comment.

The lack of transparency around that swap, which is allowed by US statute, signifies the extreme challenge in determining how federal policy may be driving the US crude and condensate export market and the obstacles posed in determining where these markets may be going.

In September, the Center for Biological Diversity and ForestEthics filed a lawsuit in the US District Court in San Francisco claiming that the administration withheld permits, environmental studies and other documents related to its export decisions. Those environmental groups have since withdrawn the lawsuit.

The lawsuit followed a similar, still ongoing lawsuit filed by environmental legal group Earthjustice in June which claimed BIS was illegally suppressing documents and communications related to its processed condensate decisions.

Denying the release of these documents violates the Freedom of Information Act, the environmental groups claim in their lawsuits.

In a rare public appearance by a BIS official, Matthew Borman, deputy assistant secretary of commerce for export administration with the BIS, told an Argus conference in late October that his agency had no plans to broaden the parameters for processed condensate exports, dashing some hopes that the administration could allow exports of a certain API gravity or allow the export of some comingled condensate.

“We don’t want people to be able to get around the statute,” Borman said.

And while Borman also indicated that his agency was far more active in terms of crude export considerations than many initially believed, he gave no indication officials were working towards any policy change.

While declining to give specific details, Borman said that several US companies have sought permission from the Obama administration to export crude oil to European, Asian, African and Latin American countries, but have been rejected because they have failed to qualify for strict exemptions to US crude export restrictions.

These companies, many of whom sought exchanges with countries similar to the Pemex swap, were not allowed to export US crude to several other countries because they could not prove the oil could not be marketed in the US, Borman said.

“You really have to show that the crude oil you want to be exported can’t be refined in the United States,” Borman said. “So it’s a really high standard.”

“So far we have not seen any application which has made that bar,” he said.

Borman said that in fiscal 2015 BIS approved 181 licenses for exports of crude oil valued at $357.3 billion, almost all to Canada. That is a decrease from fiscal 2014, when 189 applications were approved, Borman said.

ource: http://blogs.platts.com/

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Steel seems poised to keep on runnin’, keep on hidin’

So say the lyrics immortalized by Spencer Davis, which to some degree show what is wrong with the global steel market — it keeps on running and hiding from its overcapacity.
For global producers to return to 85% utilization rates, 170 million mt of global capacity has to disappear, according to Macquarie Research. To reach headier rates of 90% utilization rates, at which mills can make decent money, the equivalent of Western European and Japanese production (275 million mt) needs to exit the market.
China is the subject of much criticism in the steel market for its surplus production and rising exports, rightly or wrongly. Exports look set to surpass 100 million mt this year, and China is really the only country in the world that can cause a real supply-side squeeze as it represents half of global production.
China’s problems are perennially well-publicized these days: steel being cheaper than cabbage and all that jazz, yada yada yada. Given the rationalization we are seeing in other countries, such as the UK, the former titan and now minnow of the global market, such talk is very much the zeitgeist.
The China Iron & Steel Association and the government in Beijing say it is their job to address the country’s clear overcapacity and upgrade the industry. Indeed, as part of its transition to a consumer-led economy, Beijing, via banks, is deliberately throttling back credit to loss-making and oversupplied industries such as steel. Once the era of global cheap money ends, as seems to be the case in China, and with strong potential for US interest rate rises, the pain point will surely be tantalizingly close. Some companies have come close to breaching financial covenants of late. Once they are too indebted to make repayments on their financing, the game is well and truly up.
Somewhere out there, I think, exists the John Paulson of the ferrous world, shorting the trousers out of any company unfortunate enough to be producing or selling steel in today’s market. The short won’t only pertain to steel companies or derivatives, but builders, fabricators and the like, whole swathes of the supply chain.
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The signs are pretty clear — steel prices at multi-year lows; demand falling globally; raw materials prices tanking, not aided by booming supply moderating demand and the strength of the greenback and plummeting oil prices. Some would say current raw material costs in the steel industry are a mere function, or derivative, of oil price weakness.
Many people on the ground doubt the extent to which China can address its overcapacity.
Data seen by Platts suggests the worker/million ton of crude steel rate in China is around 2,000. Eliminating even 100 million mt, which would not be sufficient to properly normalize conditions, looks nigh on impossible. In a command economy, this wholesale job eradication would surely be tinder to the fire of social unrest.
While much of China’s production is centralized in Hebei province in the north, it isn’t all there. So CISA and Beijing are reliant on provincial governments — many of which are saddled with huge debts that will become more expensive as US interest rates rise (not to mention US dollar capital outflows, but that’s another story) — to eliminate outdated and uneconomic capacity.
Maybe there is light at the end of a dark and fairly scary tunnel, in the form of India. Modi’s reforms have really been a boon for domestic demand. And Indian mills — that don’t have assets in Europe — are sounding more upbeat these days. But there’s still bureaucratic red-tape aplenty to scythe through, and India isn’t likely to see urbanization to the extent China did.
Maybe, just maybe, many years down the line, parts of Africa will see urbanization and infrastructure spending that would really change the game. But you’d have to be a very big contrarian to be betting on that (if you can bet on that) right now.
Like they say, you can make the right trade at the wrong time and still lose your pants — as did some who foresaw the US housing market slowdown even before Paulson.

ource: http://blogs.platts.com/

Few surprises expected from OPEC despite cracks over policy — Fuel for Thought

With this in mind, it would probably be foolish to rule out some kind of deal between OPEC and non-OPEC producers to manage supply.

But, right now, there’s nothing to suggest that any such pact is even a remote possibility, and few OPEC watchers expect the oil producer group to do anything other than rubber-stamp current output policy at talks in Vienna next week.

Leading non-OPEC producer Russia has mooted a possible meeting of OPEC and non-OPEC experts on December 3 in Vienna, on the eve of the OPEC conference, and energy minister Alexander Novak has said that if there’s a need for ministerial talks, Russia is ready to participate.

But don’t forget that Novak has repeatedly ruled out coordinated action on supply, saying “artificial” cuts would not provide a sustainable solution to the oil glut. Russia has also said several times over the past year that it cannot easily cut or increase production because the bulk of its reserves are in regions where climate conditions are harsh.

And what about Saudi Arabia? Pumping in excess of 10 million b/d since March and having steadily increased the number of drilling rigs working in the kingdom over the past two years, Riyadh isn’t showing any sign that it may be preparing for an output cut.

Earlier this week, the Saudi cabinet reiterated the kingdom’s willingness to work with producers inside and outside OPEC to achieve stable markets. The subtext of this can be read as: No unilateral cuts.

So, if Russia and other key independent producers are unwilling or unable to cut production, what chance is there of an OPEC cut? A snowball’s chance in hell, perhaps?

But, of course, OPEC’s Saudi-driven market share strategy isn’t just about non-OPEC supply and the extent to which it has gobbled up growth in oil demand in recent years. It’s about the cut-throat competition within OPEC itself for the growing markets of Asia, where Iraq has already made its mark and on which Iran will target the bulk of the additional 1 million b/d of crude it hopes to export within six months of the lifting of sanctions.

Iranian oil minister Bijan Zanganeh and his Venezuelan counterpart, Eulogio del Pino, grabbed the headlines earlier this week, calling for OPEC to do something to tackle the current oversupply and to make room for Iran’s planned export increase.

“I sent a letter to OPEC to consider our return to the market and manage it,” Zanganeh said on the sidelines of a summit of leading gas-exporting countries in Tehran.

Venezuela’s del Pino, who participated in the Tehran meeting, warned that oil prices — which have been trading recently around $45/barrel — could sink to to the “low-20s” if OPEC did not restrict the flow of crude to the glutted international market.

“…OPEC has to do something, and very soon,” the Venezuelan minister said.

But Iran’s Zanganeh all but ruled out the likelihood of OPEC action at the December 4 meeting.

“I don’t believe there is a strong intention from some parts of OPEC to stabilize the market,” he said. “If we subject it to cooperation and collaboration of non-OPEC producers, it means we are going to do nothing.”

Source: http://blogs.platts.com/

Rollin’ on the river — or not, for global biofuels

The essential role rivers play in the transportation of biofuels across Europe and the United States becomes only too apparent when water levels hit extreme highs or lows as they have done this year.

Severe droughts have plagued Europe over the summer and the lack of rain has resulted in drastically low water levels along the length of the Rhine. Similarly, the largest river system in the United States, and North America, the Mississippi, has also experienced low water levels making barging difficult for buyers and sellers. Platts US and European biofuels team look at the impact this is having on biofuel markets in the region.

Europe

Persistent low water levels on the Rhine is causing barge delays and increased freight costs with the impact being felt by ethanol and biodiesel participants across Europe. Biofuels traders are using up to three barges to transport just 1,000 mt of product along the Rhine, to avoid boats from grounding on the river bed. The German Waterways and Shipping Administration (WSV) tracks Rhine levels, and by November 14, recorded that the depth of the river was at just 53 cm in Dusseldorf.

The levels were causing “huge problems” for refineries on the Rhine and anyone else who has sold product to be delivered to the Rhine, one European biofuel producer said. The inevitable result of the low levels and the need to spread product over multiple barges is that the cost of freight in Europe was soaring.

“You pay four times as much for freight costs” one broker reported, and another source explained to Platts that “the cost of bringing barges down is monumentally expensive.” Costs were heard hitting Eur100/cu m on the Rhine if there was no prior barge agreement according to one source.

The river levels and resulting high transportation costs were exacerbating the tightness of supply of ethanol and rapeseed methyl ester (RME) in Rotterdam and the wider northwest European area. Difficulties were reported getting feedstocks to mills and RME production sites along the Rhine, which was limiting the supply of spot RME volumes, traders said. Rapeseed oil (RSO) was pricing at year highs, according to sources, and a greater shortness of both RSO and RME was looming.

“The Rhine is an absolute disaster; everything’s slowed down in the upper-Rhine and above and that’s why you see the strong backwardation now in the biodiesel market,” one trader said.

Another trader expected the low Rhine levels to continue into the middle of December, which would cause a knock-on effect on RME supply in a month’s time. RME producers along the river typically buy their feedstock and take delivery a month in advance.

In a European ethanol market which has seen limited supplies from around the start of the second quarter to the present day, any glitches in the already tight supply chain have applied upwards pressure on prices. With fewer than usual barges able to navigate the Rhine, the price of T2 ethanol moved to a two-and-a-half-year high on November 18 of Eur661.25/cu m. The exceptionally high prices of European ethanol were opening up arbitrage opportunities between the US and Europe, a rare situation. But despite US prices coming under pressure, the world’s most efficient ethanol producer has experienced its own river problems at the same time as Europe.

United States

The Mississippi River system, which includes its namesake river as well as the Missouri and Illinois rivers, is the key inland traffic pathway for the US grain and corn market. Sixty percent of the grain exported from the United States is transported via barge down the Mississippi River to New Orleans.

The nation’s inland waterway system is key to keeping US agricultural products attractive to foreign buyers. A study conducted by the Illinois Section of the American Society of Civil Engineers estimated that the waterway system made shipping soybeans from Iowa to Shanghai 40% cheaper than shipping from Brazil to the same destination.

The US Army Corps of Engineers maintains a 9-foot depth along the river from Baton Rouge, Louisiana, to Minneapolis, Minnesota.

But barge traffic is subject to the whims of nature on the river. In late October this year, low water levels along the upper portion of the river made barges unloadable. In response, dried distillers grains customers in New Orleans feverishly sought product to load their vessels before the low water levels reached Louisiana.

Consequently, bids for New Orleans CIF product rose $2-$4 per short ton for a couple of days. That set off a domino effect in the industry, as product normally headed to Chicago could be shipped economically to New Orleans. That created a void in Chicago that was filled by product from Indiana and Ohio, which would normally be shipped via rail to Savannah, Georgia.

Sources said low water issues affect Mississippi barge traffic two to three times per year. The 2012 drought brought the river to near-record lows and imperiled shipping traffic.

But low water isn’t the only challenge posed by Mother Nature.

The Mississippi River is subject to flooding during periods of heavy rainfall. In July 2014, heavy rainfall forced the Upper Mississippi to flood its banks. When the floodwaters subsided, the silt and sediment that remained made portions of the Upper Mississippi impassible to heavily loaded barges for several days.

Outlook

Over recent weeks, there have been growing talks that some parts of Europe could be about to face the worst winter in 100 years with freezing temperatures, strong winds and snow said to be on their way. The much-anticipated El Niño could bring about further logistical difficulties for barging along Europe’s rivers.

One European source summarized the situation, “if it’s freezing cold, there’s no rain; river levels don’t go up. If it snows, snow stays on the mountains and rivers don’t fill up until March or April […] so they want a mild winter that will bring rain and I don’t know if they’ll get that, it’s too soon to tell.”

Source: http://blogs.platts.com/

US data indicates power sector CO2 emissions down 15.6% since 2007

As it prepares for the November 30 start-up of the United Nations Climate Change conference in Paris, the US Department of Energy has been generating data that shows total US carbon dioxide emissions have declined and then flattened out in the past eight years, with emissions specifically from the US power sector part of the same trend.
The year 2007 was pivotal, according to the DOE’s Energy Information Administration. That year the US saw its CO2 emissions peak at 6 billion metric tons, which was 20% of the global total of 30 billion mt. Also that year it was reported that China produced approximately 6 billion mt of CO2.
In 2007, the US power sector emitted 2.416 billion mt of CO2, or 40% the US total. The amount of CO2 that came from burning coal was 1.987 billion mt in 2007, or 82% of total power sector emissions.
From the 2007 high until 2012, the US’s total CO2 emissions ratcheted downward.
ryser-us-carbon-emissions
By 2012 total US CO2 emissions had fallen to the lowest level since 1994, declining to 5.226 billion mt. In five years, annual emissions had fallen 774 million mt, or 12.8%, from the 2007 level. That compared to a 15% increase it global annual output of CO2, which the European Commission said totaled 34.5 billion mt in 2012. The US’ share of the global total had fallen to 15.1% in 2012.
The five-year period of decline coincided with a financial panic and subsequent deep recession, weak power demand, the beginning of a substantial renewables build-out, and fracking and a natural gas production boom that was followed by falling natural gas prices which led to coal-to-gas switching.
By 2012 total US power sector emissions declined 387 million mt from its 2007 high. Power sector CO2 emissions were down 16% to 2.029 billion mt in 2012.
Most revealing, C02 emissions from the power sector’s use of coal fell 476 million mt to 1.511 billion mt, down 24% from its 1.987 billion mt high in 2007. CO2 emissions from burning coal declined from 82% to 74% of total power sector emissions in those five years.

First an uptick, then a flattening

The EIA data reveals that in the three years since 2012 there was first a slight uptick in CO2 emissions and then a flattening out.

In 2013 total CO2 emissions rose 2.2% over 2012, then rose 0.9% in 2014 to total 5.405 billion mt.

US power sector emissions were flat at 2.046 billion mt in both 2013 and 2014, which represents an 0.8% increase over 2012 levels. According to a recent US DOE report, the ramp up of wind generation in 2013 reduced annual CO2 emissions by approximately 115 million mt.

Compared to 2007, power sector emissions in 2014 were down 15.6%. Emissions from burning coal rose slightly in 2013 and flattened in 2014 at 1.570 billion mt. The 2014 level of CO2 from the power sector’s burning of coal is down 21% from its high in 2007.

For the power sector, perhaps what is of greatest importance is the fact that power sector emissions were 37% of the US total CO2 emissions at the end of 2014, compared to 40.4% at the end of 2007.

Emissions projected steady in 2014

The US’ CO2 emissions for 2015 are projected by the EIA to total 5.424 billion mt, a 0.3% rise over 2014, but still one of the lowest levels in the past 16 years.

What congregants in Paris will determine is the current global emissions total is hard to know precisely, with some of the uncertainty surrounding China.

Most estimates peg China’s CO2 emissions somewhere between 8 and 9 billion mt annually. However, a recent report from The New York Times raised questions about the amount of coal that China burns annually for power. The report suggested that a Chinese government agency has been under-reporting by some 17% the amount of coal burned. An error in reporting roughly 600 million mt of coal use would translate into a roughly 1 billion mt error in reported CO2 emissions.

Governmental agencies around the globe have all had their reporting inconsistencies. The International Energy Agency has said it believes 2013 global energy-related CO2 emissions was 32.2 billion mt, with China emissions representing 28% of that total, of 9.01 billion mt. The IEA has said it believes 2014 global emissions were flat at 32.2 billion mt, with the flatness due to “global economic weakness.”

The European Commission reported a “new high” of 35.3 billion mt of global CO2 emissions for the year of 2013. I would agree with the IEA in saying that the 2014 emissions total was roughly the same as that in 2013.

Source: http://blogs.platts.com/

The Keystone XL saga: missed chances, shifting sands — Fuel for Thought

If Bill O’Reilly, author of such books as “Killing Lincoln” and “Killing Kennedy” were to turn his attention to pipelines, his next book might be entitled “Killing Keystone.”

It would be a tale full of twists and turns, conspiracy theories, missed opportunities, miscalculations and bad timing surrounding TransCanada’s proposed Keystone XL pipeline. It would not, however, be a book about whether the now-notorious project would have been good simply on its merits.

The pipeline extension was rejected by US President Barack Obama on November 6 because it would not be in the national interest. The law governing cross-border pipelines leaves that phrase, “national interest,” as murky as the oil sands that Keystone was designed to transport from Alberta, Canada, to the US.

Obama pinned his rejection on climate change. Secretary of State John Kerry, in his formal recommendation to reject the application, called the oil sands “one of the dirtiest sources of fuel on the planet.”

But a look at the underlying rationale for the rejection shows that resilient US shale production played an equally important role in the decision.

In its initial Supplemental Environmental Impact Statement (SEIS) evaluating the environmental impact of Keystone XL, the US State Department concluded that the Alberta oil sands, while a more carbon-intensive form of fuel, would be developed with or without the pipeline. In the absence of Keystone XL, that crude would be transported to the US on railcars — a more dangerous mode of transportation — and to Asia on other yet-to-be-built (or in many cases, approved) pipelines.

That rationale was published in February 2014, when crude was trading above $100/b. But at $40/b, the argument loses much of its its power.

“Market conditions have changed since the (original report) was written; oil prices have declined considerably and the boom in US production has continued,” the US Energy Department noted recently.

The US Environmental Protection Agency put it this way in a February 2015 letter: “In early 2014, when the final SEIS was published, few predicted that oil then selling at over $100 per barrel would last week have been priced below $50 per barrel.”

What does a 14-inch pencil have to do with this?

In September 2013, the American Petroleum Institute decided to mark the fifth anniversary of the Keystone XL application by handing out huge pencils to legislators and the press. The pencils were emblazoned with the slogan: “KXL delay: 5 years and counting.”

While a clever gimmick (pencils, because the fifth wedding anniversary is wood), the handout missed its mark.

By the time the API distributed its cheeky anniversary gift, Keystone XL had already been rejected once and was in the midst of a second review. That break in the action is not often mentioned by the pipeline’s supporters, because it dredges up the memory of what many consider a major miscalculation by Congressional Republicans.

In 2011, as the mandatory review of the pipeline was nearing a close, proponents had a lot going for them. Unemployment was high, as were crude prices. Keystone XL was being promoted as a jobs producer, a pretty persuasive argument at a time when the unemployment rate was over 8%.

The Canadian government strongly suggested that approval of the project was a test of the relations between Canada and the US. One high-ranking Canadian official at an event held under Chatham House rules — where no direct quoting is allowed — remarked, “If you can’t make a deal with us, who can you make a deal with?”

But then Republicans decided to pass a provision to an unrelated bill forcing the Obama administration to make a decision on Keystone XL within 60 days. Obama warned against the move, saying it would not allow for sufficient time to complete the review. Republicans called his bluff and Obama rejected the permit in February 2012.

That forced TransCanada to resubmit the application, triggering another lengthy, and costly, review process, culminating in a second rejection. Of course, in the ensuing three years, the economic landscape shifted, market conditions changed dramatically, and presidential politics made Keystone XL an untouchable subject.

Whether the project would have been approved in 2011-2012 is a matter of speculation. And whether there will be a third application is a story for another time — and another pencil.

Source: http://blogs.platts.com/

Caltex Australia reaps rewards from parenting package

Three years ago I blogged on The Barrel how Caltex Australia was breaking the mold in the traditionally male-dominated refining industry by launching the nation’s most generous workplace support package for new parents.

In 2015, Caltex’s willingness to show its feminine side through its “BabyCare” scheme appears to have paid dividends. Not only has the program helped Caltex win a gender equality citation from the Australian government’s Workplace Gender Equality Agency, the company is now reporting a 25% increase in the number of women transitioning back to work and developing their careers after having a baby.

A lot has changed for Caltex since BabyCare was launched in 2012. Back then, the company operated two oil refineries on Australia’s east coast and was 50%-owned by US major Chevron. Now, it operates just one refinery, its 109,000 b/d plant at Lytton in Brisbane, having converted its 135,000 b/d facility at Kurnell in Sydney into an import terminal in October 2014.

Caltex’s ownership structure has also been transformed by Chevron’s decision in March this year to sell out of the Australian downstream sector. Chevron made A$4.7 billion ($3.3 billion) from the sale of its half share of Caltex, leaving the refiner/marketer entirely in the hands of its Australian shareholders.

The balance of male and female employees at Caltex has also changed over the past three years. In 2012, about 70% of the company’s employees were male, but today the figure is 63%.

“Caltex has taken some big strides in terms of improving its gender equality over recent years, but our journey continues,” according to the company’s head of capability, performance and reward Alena Mackie. “We are particularly pleased with our negligible gender pay differential of 1.1% on a like-for-like basis and the significant progress that we’re making towards our goal to increase the number of female senior leaders across our organization.”

In 2013, one in every five senior leaders at Caltex was female. “We reached our goal of improving this to one in four last year and are now on track to make it one in three in 2016,” Mackie said.

Caltex is achieving the milestones by strengthening its senior female talent pipeline through the provision of development and promotion opportunities, and continuously monitoring “key gender metrics.”

But what hasn’t changed is Caltex’s unique position as a provider of financial and practical support for parents who are returning to work after the birth of a child. Caltex’s BabyCare package goes far beyond corporate Australia’s usual provision of paid leave for employees just before and after a birth.

The scheme provides workers who are the primary care-giver a quarterly bonus amounting to 3% of their base salary, or 12% annually, up until the child’s second birthday. It also offers payments of around A$1,500 for emergency childcare through a service which provides nannies and mothercraft nurses.

The payments are on top of the company’s existing provisions for 12 calendar weeks full pay or 24 calendar weeks half pay for birth mothers, and eight calendar weeks full pay or 16 weeks half pay for non-birth parents.

The aim of the package is to remove obstacles for parents who want to return to work at Caltex after the birth of a child, a company spokesman said. “The key is providing options for those who want to come back,” he added.

“We’re not aware of any other companies that provide the same financial and practical support,” the spokesman said. “We also seek to provide returning parents with flexible work arrangements and most of our returning parents tend to return to work on a part-time basis,” he added.

“While some companies in the broader market also provide childcare assistance, we know through discussions that many face challenges in doing this on a national and consistent basis. Our BabyCare package simply addresses this challenge through the financial support and childcare search assistance that we provide. In this way, the parent has the support they need to find childcare solutions that are appropriate for their specific circumstances.”

So far the program has been a huge success, with the number of parents returning to work now at 100%, up from around 80% previously, the spokesman said. And of those returning, only one has chosen not to remain at the company after 12 months, which is by any measure an impressive result.

Source: http://blogs.platts.com/

The ‘M’ word in fuel marketing is not ‘mileage.’ It’s ‘millennials’

Millennials are today’s low-hanging fruit for a joke. I’m guilty. A few weeks ago at a party, discussion turned to their sense of entitlement. The office gets pizza. The millennial gets a salad. The office gets the local donut chain. The millennial wants Krispy Kreme. A friend who, like me, is about 20 years older than the people we were unfairly criticizing behind their backs noted, “It’s all the trophies.” I laughed. We all did.

The reality is that millennials are very much no joke to US marketers, who so desperately want to separate them from their cash.

At last week’s Sigma annual meeting of fuel marketers in Boston, panel moderator and OPIS gas guru Tom Kloza directed the conversation toward the nation’s young spenders.

“The millennials, the spoiled brats, how at the end of the day do you sell them on your stations?” Kloza asked longtime US and Canada fuel marketers Bob Espey, Jack Pester (pronounced PEEE-ster) and Eric Slifka.

Slifka, CEO of Global Partners LP, said if there’s anything millennials like, it’s convenience, and retail chains are uniquely poised to provide that. The bigger problem, the panelists noted, is getting millennials to work at convenience stores.

“It’s a human resources challenge,” said Espey, CEO of Canada retail fuels giant Parkland Fuels. “They are willing to work hard. It’s our task to get them excited about the industry.”

The reality is that millennials are very much no joke to US marketers, who so desperately want to separate them from their cash.

At last week’s Sigma annual meeting of fuel marketers in Boston, panel moderator and OPIS gas guru Tom Kloza directed the conversation toward the nation’s young spenders.

“It’s a human resources challenge,” said Espey, CEO of Canada retail fuels giant Parkland Fuels. “They are willing to work hard. It’s our task to get them excited about the industry.”

ester, recently retired from Pester Marketing and formerly a key driver of the Coastal brand on the US West Coast, said he would have loved to have had the power of social media in the 1960s. He said Sheetz, Kroger and Costco are among the companies doing dynamic things with their brands today, so much so that the gasoline brands are developing independently from the store side of the business.
“With social media, you can absolutely develop a brand,” Pester said.
bair-supergirlWhat do you think? Might 7-Eleven need to start carrying those crazy new Oreos flavors? Perhaps a bacon bar at Buc-ee’s in Texas? Supergirl Slurpee cups (especially as The Washington Post reviewer Hank Stuever has noted that Supergirl is a carefully cloaked critique of millennial wish fulfillment)? Let us know in the comments how many millennials you see at your next fill-up.

Source: http://blogs.platts.com/

Iron pellet market set to fall before Samarco accident

Brazilian iron ore miner Samarco’s tragic accident and environmental disaster has left a hole in the pellet market, but buyers may not be scrambling for alternatives. The effect on pellet premiums, however, may be helping buttress a sagging market.

Premiums will fall next year, but perhaps not by the same degree on account of Samarco’s accident, echoed two pellet buyers.

Platts assessed November Atlantic estimated contract premiums at $30/dmt. Prior to the accident, sources expected a fall in premiums, with buyers indicating a settlement in the mid-$20s/dmt for 2016 with some suggesting perhaps a drop to the low $20s/dmt may be appropriate based on what some said was the loosest pellet market in many years.

Iron ore pellet premiums had been on a downward path through the second half of 2015, and Samarco’s suspension, on capacity rated at over 30 million m t/year, left markets looking for reactions from participants. Various parties state three months as the minimum time frame exports may possibly come back into the market, with more open-ended worst-case scenarios.

Buyers, mainly in Europe, the Middle East and some in Asia, will ensure they have sufficient cover over the first and second quarters of 2016, and may be revisiting other suppliers to bring forward contracted deliveries or use options to snag extra cargoes.

Just earlier in Q4, some buyers had been “managing” contract volumes to effectively take less, reducing their near-term loading requirements as global steel demand fell.

Spot volumes had been on offer, with SSI UK’s distressed cargoes finding homes at what was understood to be vastly reduced premiums against contract levels.

With low prices for steel and scrap and weaker utilization rates, demand for pellets had tailed off. Pellets are used to boost efficiency in the production process of steel and cut waste.

The direct reduction (DR) pellet market may be more a wild card.

Samarco was one of three to four key global DR pellet suppliers, and with Voestalpine’s Corpus Christi DRI plant coming on stream soon, any long-term deficit in DR pellets may hit buyers in the Middle East, North Africa and North America harder than in blast furnace pellets markets.

Sweden’s LKAB is expanding, and Vale may be able to increase DR pellet ratios at its plants, but many are tied to supplying BF grades to steelmakers in Europe and Asia. Vale’s 9 million mt/year Oman pellet plant has already ramped up. Bahrain Steel may help step in, as could Metalloinvest, given both have pelletizing capacity that could be turned to more DR grades.

DRI (direct reduced iron) trends for those mills tied to using seaborne pellets are a mixed bag. Lower output in Egypt was blamed on natural gas availability, undermining some industry expectations this year, and the US and Trinidad slowed output recently, with cheap steel imports hot on the heels of Persian Gulf producers’ long-term ambitions to operate at steady rates following a string of investments. Iran is looking to import more, and could contribute to further tightness.

Samarco’s impact on China is so far being shrugged off.

Platts weekly China spot pellet premium dipped $0.50/dmt during the week of Nov. 9 to $13.50/dmt, as demand for pellets overall is low when lump is far cheaper and steel prices and margins remain pressured.

A stockpile said to have built up in Qingdao port with 1 million mt of Samarco pellets following recent heavy import volumes remains available, with limited buying appetite.

“No one is buying for a while, nothing has changed,” a source said of the Samarco spot material in China.

A contract buyer sums up Samarco’s situation as terrible for the local community with potential changes to mining permitting and regulations in Brazil, but not a huge market event.

“There is no reason for premium to go up. DR may see a bigger impact,” he said. “The correction may be lower, but still we’ll see downside.”

Premiums will fall next year, but perhaps not by the same degree on account of Samarco’s accident, echoed two pellet buyers.

Just earlier in Q4, some buyers had been “managing” contract volumes to effectively take less, reducing their near-term loading requirements as global steel demand fell.

Spot volumes had been on offer, with SSI UK’s distressed cargoes finding homes at what was understood to be vastly reduced premiums against contract levels.

With low prices for steel and scrap and weaker utilization rates, demand for pellets had tailed off. Pellets are used to boost efficiency in the production process of steel and cut waste.

The direct reduction (DR) pellet market may be more a wild card.

Samarco’s impact on China is so far being shrugged off.

A stockpile said to have built up in Qingdao port with 1 million mt of Samarco pellets following recent heavy import volumes remains available, with limited buying appetite.

“No one is buying for a while, nothing has changed,” a source said of the Samarco spot material in China.

A contract buyer sums up Samarco’s situation as terrible for the local community with potential changes to mining permitting and regulations in Brazil, but not a huge market event.

“There is no reason for premium to go up. DR may see a bigger impact,” he said. “The correction may be lower, but still we’ll see downside.”

Source: http://blogs.platts.com/

What a difference a year makes for European ethanol

The European ethanol community gathered in Budapest over the first week of November to look at the current challenges and opportunities facing the ethanol, and wider biofuels, markets. As the dust settles and the excitement wanes, we take a look at the overarching messages and opinions coming from the biofuels, and in particular, ethanol industry.

Current market fundamentals left many in good cheer

In contrast to previous years, the overall sentiment of attendees at the industry event was positive, both in terms of the current situation and outlook for the future.

Ethanol prices are averaging nearly Eur60/cu m higher year-to-date for 2015 compared with the same period of 2014, supported by market fundamentals which have seen low supplies and sustained demand over the summer months and into the fourth quarter. Imports into Europe have been limited over the year so far compared with 2014, and with the UK’s Ensus plant being down since February, an element of supply-squeeze has applied upwards pressure on ethanol prices. Although low crude and gasoline prices have limited discretionary blending and demand for exports from Europe, driving levels across Europe have been encouraged by lower prices at the pumps which has helped sustain demand for ethanol.

With ethanol prices this week hitting fresh-highs almost every day, it was the supply-side that is driving prices rather than demand, according to traders. The winter months traditionally see lower demand for road fuels compared with the summer months, and as mid-November fast approaches, market participants were not expecting a significant uptick in buying. Although those producers with plants switched on should be running on “full whack,” according to one producer, uncertainty over the output of one Rotterdam-based plant was sustaining buying interest.

A market is never without its difficulties

All the positive talk might lead many to believe that the European ethanol market is paved with gold, but the year has not been one without difficulties.

Droughts across much of the continent have left the Rhine and Danubes at depleted levels, making moving barges around and into Rotterdam very difficult. Many attendees across the whole biofuels complex were struggling with deliveries and queues because of the low river levels.

The droughts have also affected crops across the region, resulting in quality issues of producers’ dried distillers grains solubles (DDGS). Extreme weather conditions can impact corn and wheat crops and leave them infected with mycotoxins that can affect animal health. In this situation, it is suggested that the amount of DDGS fed to livestock is reduced.

Alongside this is the memory, always lurking at the back of any producer’s mind, of the negative margins that plagued the market over the winter of 2014 and into the first quarter of 2015. Although times might be good now, the market can never quite escape from the shackles of darkness which hung over the industry for so many months.

The future’s bright, the future’s ethanol

The elevated prices created a positive backdrop for the biofuels event in Budapest and aside from conversations on the prompt market, talk also turned to the future of biofuels.

As has been the case for a number of years, the post-2020 environment holds many uncertainties for the biofuels industry. The European Union mandate is a 2020 goal post, with nothing in place, as yet, to tell the industry where they need to aim after that date has gone.

Despite the lack of clarity and direction, ethanol participants in Budapest, in the most part, believed they had a role to play in the fuel and road-transport mix after 2020. One European producer said that post-2020, second generation biofuels were not at the stage where they could adequately cover any space left by first generation. The same applied to electric cars: “They cannot deliver,” he said.

The producer added that, with the belief that alternative biofuels would be unable to fulfill any potential new quotas by themselves, first generation biofuels would continue as a constant. “I think crop-based ethanol will be there for quite some time,” he said.

Alongside this post-2020 European outlook, there was also bullish talk on demand for ethanol elsewhere. The high-octane properties of ethanol versus other fuel additives were cited by a number of people as a demand quality. One American producer in attendance told Platts that he expected the US to incrementally increase its demand for high-octane fuels by 2017, which would result in the US becoming net-short in ethanol. He did not expect that the US could meet domestic demand and would have to start looking further afield for product. With Brazil in a constant state of “feast or famine” with regards to its ethanol production and its ability to export, imports would have to come from further afield, potentially Europe.

One Europe-based trader was seeing a slight increased demand for blending in the United Arab Emirates. Despite gasoline levels being low compared with ethanol, and demand for discretionary blending being minimal, the trader was seeing a tangible call for higher octane fuels in the Arabian Peninsula.

Even with crude prices where they are, and even with little indication on the horizon that OPEC will reduce its barrel output any time soon, market participants were even optimistic that crude will eventually fall and demand for discretionary blending will increase in the near future. With Brent hovering around $45/barrel and ethanol in Europe at a two-year high, it’s possible this particular outlook was one to be taken with a pinch of salt.

Source: http://blogs.platts.com/