Cepsa teams up with Apical to build USD1 bn biofuels plant

Spanish oil company Cepsa teamed up with vegetable oil processor Apical Group’s Bio-Oils unit to build a second-generation biofuels plant in southern Spain, a USD1.11-bn project, said Hydrocarbonprocessing.

The plant, set to start operating in 2026, will be Southern Europe’s largest, the Spanish company said on Friday. It will have a capacity of 500,000 tons of renewable diesel and sustainable aviation fuel (SAF) per year using organic waste, such as used cooking oils. Biofuels are seen as key to decarbonize transportation in sectors hard to electrify, like aviation.

Building and operating the facility, which will be in the southern Spanish region of Andalusia, will create around 2,000 direct and indirect jobs and save 1.5 million tons of CO2 emissions per year, Cepsa said.

The project will help the oil company achieve its goal of producing 2.5 million tons of biofuels by the end of the decade.

We remind, Cepsa plans to nearly double its investments over the next three years to a total of 3.6 B euros (USD3.82 B), with more than half of that amount going to sustainable energy and mobility. It also posted a full-year net profit at current cost of supplies (CCS) of 790 MM euros for 2022, up sharply from the 310 MM euros reported in 2021. The planned investment increase of 93% for 2023-25 is from the previous three years, Cepsa said.

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Jefferies has downgraded its rating on LyondellBasell from “Buy” to “Hold” on rising US recession risk, as well as the US shale thesis being “played out”, said Fintel.

“With OPEC’s production cut and US natural gas testing around USD2/MMBtu, the US shale advantage thesis has played out," Jefferies analyst Laurence Alexander said in a research note. "A US recession in H2 2023-2024, in contrast, still presents significant risk to sentiment as it will likely trigger another round of destocking and margin erosion.”

While near-term trends are encouraging – specifically strong refining margins, stable propylene spreads and polyethylene (PE) benefitting from competitor force majeures, capacity expansion delays and higher oil prices, which support US olefins margins, demand risks are rising, he pointed out. “We expect the key risks in H2 2023-2024 to be increasing pressure on US consumers as the US economy slides into recession,” Alexander said.

“We expect the recession to last 4-6 quarters, with the first step-up in the unemployment rate likely triggering another round of inventory destocking in retail channels,” he added. The analyst estimates that each 1% cut to global GDP represents a USD250-300m headwind to LyondellBasell’s earnings before interest, tax, depreciation and amortisation (EBITDA) due to compressing spreads.

In a more severe recession, naphtha usually dislocates from oil prices, most likely creating another USD650-750m headwind to EBITDA, he pointed out. In this situation with markedly lower naphtha feedstock prices benefitting its competitors, LyondellBasell’s US cost advantage based on natural gas would erode.

We remind, LyondellBasell NV said it was exploring strategic options for its U.S. Gulf Coast-based ethylene oxide & derivatives (EO&D) business. The company said it was analyzing the potential to retrofit the Houston refinery to build up its Circular and Low Carbon Solutions (CLCS) business.

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Covestro’s Q1 earnings before interest, tax, depreciation and amortisation (EBITDA) will be much higher than previous guidance and analysts’ consensus, the Germany-based polymer major said.

While demand remained weak in Q1, “we took the right measures on the cost side”, chief financial officer (CFO) Thomas Toepfer said.

“As a result, the first three months of 2023 have been significantly better than expected at the beginning of the year,” he said.

Covestro's preliminary Q1 EBITDA amounts to EUR286m - compared with the company's previous guidance of EUR100-150m and analysts’ consensus of EUR158m.

However, preliminary Q1 sales of EUR3.74bn are lower than consensus expectations of EUR3.94bn. Covestro is still preparing the Q1 results report, which is due to be released on 28 April. Toepfer will leave the company as of 31 August 2023 to join European aircraft manufacturer Airbus as CFO.

We remind, Covestro successfully started up a new world-scale facility for the production of chlorine in Tarragona, Spain. It is the first world-scale production plant for chlorine based upon the highly innovative and energy efficient ODC (oxygen depolarized cathode) technology invented by Covestro and its partners.

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Linde announced it has signed an agreement with Heidelberg Materials, one of the world's largest building materials companies, to jointly build, own and operate a large-scale carbon capture and liquefaction facility, said the company.

Carbon dioxide is a by-product of cement production and is estimated to be responsible for around 7% of global carbon emissions1. Through the use of carbon capture, Linde and Heidelberg Materials will aim to reduce carbon emissions at Heidelberg’s Lengfurt plant in Germany. The new plant will capture, liquefy and purify around 70,000 tons of CO2 per year, with the majority of the resulting liquid CO2 to be marketed by Linde as feedstock for the chemicals and food & beverage end markets.

"For many of Linde’s customers in the heavy industrial sector, improving the environmental performance of their operations is a priority," said Sean Durbin, Executive Vice President EMEA, Linde. "Our innovative project with Heidelberg Materials is one of the first large-scale plants of its kind for the cement industry. Considering current market constraints, it is also a welcome new source of CO? that will help ensure supply for the merchant market."

Linde is a leading global industrial gases and engineering company with 2022 sales of USD33 billion. We live our mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making our customers more successful and helping to sustain, decarbonize and protect our planet.

The company serves a variety of end markets such as chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. Linde's industrial gases and technologies are used in countless applications including production of clean hydrogen and carbon capture systems critical to the energy transition, life-saving medical oxygen and high-purity & specialty gases for electronics. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.

We remind, Linde has signed a long-term agreement with oil and gas firm ExxonMobil for the off-take of carbon dioxide (CO2) from its new clean hydrogen production site in Beaumont, Texas. Back in February (2023), the industrial gas giant said it would invest USD1.8bn to build, own and operate an on-site complex to supply clean hydrogen and nitrogen to OCI Global’s “world-scale” blue ammonia plant in Texas.

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Thailand’s Suntory PepsiCo Beverage Co commenced the use of locally produced recycled polyethylene terephthalate (R-PET) for its beverage bottle packaging, said Suntorypepsico.

The company announced in end-March that it will produce 100% R-PET bottles soon in line with its sustainability targets. Previously, the use of R-PET for food or bottle applications was banned in Thailand due to safety concerns.

However, the country allowed the use of R-PET for food applications since June 2022 which prompted local recyclers to apply for supply permits. Only the joint venture between PTT and Alpla under the entity Envicco was able to secure the permit in March.

Other major recyclers in Thailand which include EcoBlue and Indorama continue to wait for the approval of supply permits. Approvals of the local supply permits are issued by the Thai FDA (Food and Drug Administration).

Thailand’s move to allow the use of R-PET for food packaging was welcomed by recyclers as it would help bolster the trade of recycled polymers in general.

Although the regulation is solely applicable to R-PET, with no plans announced on recycled polyethylene (R-PE) and recycled polypropylene (R-PP) yet, overall market sentiment is bullish on the steady uptake of recyclates in the coming years.

Thailand remains as one of the top producers and consumers of virgin plastics in Asia and its shift towards sustainable materials is expected to significantly impact both virgin and recycled polymers demand outlook. In May 2022, Taiwan passed a similar legislation to allow the use of R-PET for food application and most major recyclers in the market have clinched supply licenses.

With the opening of domestic market for food-grade R-PET in both Thailand and Taiwan, export volumes are not seen to dwindle due to separate allocations between domestic and overseas buyers.

We remind, Taiwanese regulators have recently granted supply licences to major producers of recycled polyethylene terephthalate (R-PET) for food-grade applications in the domestic market. Far Eastern New Century, the biggest R-PET exporter in Asia, received its local supply license from Taiwan’s Ministry of Health and Welfare in December 2022.

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