September 29th – Drought and Drafts

September 29th 2022

Drought and Drafts

ANTARES: We attach to this News a flyer with the full detail of all our staff and offices for your ready reference.

Week end duty staff: (Friday, September 16th as from 1200 hours until Monday September 19th, 0800 hrs)

– HQ Buenos Aires:

Gastón Cabrera +54 9 11 5578 4556

Horacio Vazquez +54 9 11 5578 4554

– Upriver:

Sebastián José Ferrara +54 9 11 3156 1679

Franco Gabriel Ostojic +54 9 11 6656 1678

Walter Nestor Travaglini +54 9 11 3156 1680

National Holidays: Friday, October 07th and Monday October 10th

The River Parana Draft Forecast data has not been issued as we close today.

We will send update along with our Daily Draft Report soonest the data is supplied by INA (National Water Institute).

Grains and Markets:

The latest forecast for wheat harvest, soon to start now, is 17.5 million tons as estimated by the Buenos Aires Grain Exchange. Dry weather has affected yields significantly.
Forecast of soyabean for 2023 harvest is now 48 million tons. Soyabean crop is now 15.5 per cent up and over 2022 harvest. This will bring it back to being larger volume than maize.
South Korea has bought 68,000 tons of maize rumored to be sourced in ECSA.

Drought and Drafts:

For the first time in a long time there is “informal” talk of the end to the La Niña effect on the weather over South East South America. Some sources from weather institutes read a change in the weather patterns that will return rain to “normal” amounts over the area. If this continues to develop there is the double advantage of better weather for agriculture yields (see above) and also for a return of the River Parana to water levels that will allow for “full” cargoes to be loaded at Upriver ports. If this comes about the significant change would be seen as from the Southern Hemisphere autumn (March 2023). Let us hope the optimists are on the correct path.

Odin Tank Storage Market Report for September 2022:

Please find below the Tank Storage Report issued by our friends Odin
Early September showed large fluctuations on the European gas market. The European Union made an agreement to reach an 80%-fill capacity level for storage of natural gas by the 1st of November. This European Agreement had a price-increasing effect after June, as Europe’s policy was to buy and store large amounts of natural gas for the winter months. The prices on the TTF Natural gas futures rose rapidly up to 339 EUR/MWh on August 26th. Various European countries reported that they reached the goal ahead of planning causing the prices to drop to 216 EUR/MWh a mere week later. Bad news from Gazprom on longer closure of Nord Stream 1 preventing gas flow from Russia to Europe caused the price to rise again to 268 EUR/MWh two days after. Although prices have been on a downward trend for the remainder of September uncertainty on this market will likely remain, as, on average, even with 100% of storage capacity filled, Europe uses more natural gas during the winter months compared to the total storage volumes available. Therefore, after, and even during the winter, Europe will remain reliant on supplies of natural gas.
The growth of Carbon Capture and Storage solutions as a tool to decarbonize the industry is gaining momentum in the United States. Major Oil and Gas producers have expressed interest in the technology, which is backed by supportive federal policy. The existing network of pipelines and storage capacity makes it a viable option for Terminals to improve their carbon footprint.
Oil – Petroleum
Pricing for crude at the US Gulf coast continue to mature, reinforced by steadily growing production of WTI, Bakken, and Canadian heavy crude and the fact that the demand is considerably weaker than a year ago (down 9% YoY). WTI just under $80 per barrel and Brent with a large spread at $86.46 per barrel.
Further increase in supply in the US is expected as the White House is considering to extend the release program of the Strategic Petroleum Reserve beyond October. In March 2022, the US started a six-month plan to tap 1 million barrels per day from this reserve till end of October, which has contributed to softened prices at the pump. Extending this program for the months November, December, and January is under discussion creating new opportunities for export. The effects of which can also be noticed by the amount of storage requests in Europe, the first 2 to 3 weeks of September we saw a spike in demand for storage of Diesel. Mainly for smaller quantities, so this could also be caused by the ongoing switch from gas-to-oil, and change-over to winter specs.
The storage requests are for fuel oil, which is in contango and diesel due to the upcoming tightening of the sanctions. Also ethanol requests are enormous. However, the availability is very limited to nonavailable.
The threat of natural gas shortage for the winter in Europe also has an effect on the European chemical industry. Refineries and chemical plants use natural gas as feedstock and source of energy. With today’s uncertainty in Europe, the most gas-intensive chemical production, and associated products such as ammonia, methanol, MMA, melamine, nylon, and CAN is already seeing European production capacity shutting down temporarily. These shutdowns, and possible further closures in the industry if gas prices continue to increase, have slowed down demand for chemical storage during last month. As a result, for the first time in 2022, we see a significant decline in storage enquiries for chemicals in Europe. Hard to predict whether this will be temporary. It will likely result in increased imports from regions with lower natural gas and electricity prices, but whether or not the import numbers can match the loss of production remains to be seen. The latter will have to be the case for demand to pick-up again.
Renewal of contracts with inflation correction, will result in about 12% increases, what we haven’t seen in a long time. Such an increase might be another reason (in combination of the uncertainties and reduced consumer confidence) for not renewing contracts.
US President Joe Biden signed into law the Inflation Reduction Act of 2022 last month. Among other measures, the bill extends the existing biodiesel and renewable diesel tax credits and introduces a higher tax credit for sustainable aviation fuel (SAF). Market watchers say that such provisions will lead to increasing SAF output and commercial availability. But there are concerns that the higher tax credits for SAF relative to renewable biodiesel could weigh on output in the latter sector. Sustainable feedstocks – like used cooking oil – are in short supply in the US, and there is speculation that such supplies could be diverted from renewable biodiesel to SAF as a result of the new legislation.
There is still a high demand for (especially heated) biofuel storage, we do expect capacity coming available in Q4, but spot capacity is hard to find.
Exports of sunflower oil from Ukraine were relatively stable in September. President Putin’s partial mobilization announcement adds a new chapter on uncertainty, especially on the export corridor agreement for grain shipments, which although established for Grain also impacts stability of Vegoil supply from the Black Sea region.
Availability for Vegoil storage in Europe is tight, especially in ARA closer to non-existent. We received multiple enquiries for spot storage of Vegoil which unfortunately had to be disappointed.

LNG export projects from Argentina:

With considerable investments flowing in to the Vaca Muerta (North West Patagonia) shale oil and gas field there is a strong push to find the principal outlet for exports. Bahia Blanca is lobbying to be the site for an LNG concentration plant which they propose to locate where the Vale Potash was to be located and where an unfinished berth is partly constructed. Also there is interest by Excelerate to participate in the business. There is at the moment talk of participation in the installation planned to be constructed at the head of the TGS pipeline.

There is also the announced investment by YPF-Petronas which is looking for a “home”. The alternatives being mentioned are again Bahia Blanca or Punta Colorada, further south along the North Patagonia coast.

Lastly there is talk of Tecpetrol (Techint’s upstream oil company) who also talk of building an export terminal for crude oil and, or gas.

Weather in to the week-end for bunker deliveries at Zona Comun:

The forecast is for good operating weather during the rest of this week and the weekend.
As always, the STS operation is up to the discretion of the Master’s of the vessels involved.

Will keep you posted.

Best regards,

Antares Servicios Maritimos S.A.

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