OFI June 2016

June 2016 � Vol 32 No 5www.oilsandfatsinternational.com

INDIAOvercomingchallenges

BLEACHINGEARTHSSalt of the earth

June cover 16 final.indd 1 07/06/2016 10:25

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FEATURES

INDIA

17 Overcoming challenges

PLANT, EQUIPMENT & TECHNOLOGY

20 2016 listing & wallchart

BLEACHING EARTHS

26 Salt of the earth

OLEOCHEMICALS

32 Dream or nightmare?

MOROCCO

34 Fighting for China

THE BUSINESS MAGAZINE FOR THE OILS AND FATS INDUSTRY

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CONTENTSVOL. 32 NO. 5 JUNE 2016

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WITH EDIBLE OIL IMPORTS ACCOUNTING FOR NEARLY 60% OF INDIA’S CONSUMPTION REQUIREMENTS, THE COUNTRY NEEDS TO LOOK AT RAISING OILSEED PRODUCTIVITY AND EXPANDING GROWING AREAS P17

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NEWS & EVENTSComment

The Paris climate deal and the Trump effect

News

IOI in U-turn over moveto sue RSPO

Biofuels News

EPA proposes 18.8bn gallons of biofuels blending for 2017

Biotech News

Monsanto rejects Bayer’s US$62bn bid

Transport & Logistics News

Louis Dreyfus seeks investment in port logistics in Middle East

Renewable Materials News

Amyris in venture with South Korea’s CJ

Diary of Events

International Market Review

Statistics

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PHOTO: CLARIANT

June contents.indd 1 14/06/2016 11:29

IOI in U-turn over move to sue RSPO


NEWS

COMMENT

The Paris climate dealand the Trump effect

More than 170 nations officially signed the landmark Paris climate agreement in New York on 22 April following its adoption

in December (see Comment, OFI February 2016). The agreement aims to limit global temperature rises to below 20C and enters into force if at least 55 nations representing 55% of global greenhouse gas (GHG) emissions ratify it.

Countries which have pledged to ratify the agreement this year include China – the

world’s biggest emitter of emissions – and the USA, two countries which together account for 38% of global emissions.

China has pledged early accession before it hosts the G20 summit for the first time in September.

However, noticeably absent from the list of early adopters are India, Japan and the EU. The EU – which accounts for 12% of global emissions – counts as one signatory and former French Foreign Minister Laurent Fabius, who presided over the UN climate deal, says it will be “damaging” if the bloc is late to ratify.

In the USA, leaders in the ethanol sector have already criticised the government for not including biofuels in the country’s GHG reduction plans.

While 37 countries have included biofuels in their Intended National Determined Contributions (INDCs), the USA has not.

“It is beyond baffling that biofuels or the Renewable Fuel Standard were not included in the US plans to reduce GHG emissions,” said Renewable Fuel Association president and CEO Bob Dinneen. “As the US signs the Paris Agreement, it needs to look no further than its own backyard and fully implement the most potent and proven weapon to combat climate change – the RFS.”

Meanwhile, the rest of the world can only watch and wonder what effect Donald Trump, the presumptive Republican presidential candidate, may have on the deal.

Without mentioning names, Fabius recently told an audience in London: “Think about the impact of the coming US presidential elections [in November]. If a climate change denier was to be elected, it would threaten dramatically global action against climate disruption. We must not think that everything is settled.”

Trump has already said he is “not a great believer in manmade climate change” and told supporters at a North Dakota rally that he would “cancel the Paris climate agreement and stop all payments of US tax dollars to UN global warming programmes”.

So can the USA scupper the deal? Not if other big emitters such as China, the EU, Russia, India, Japan and Brazil ratify it – once 55 countries accounting for 55% of GHG emissions ratify the deal, it enters into legal force, making it difficult for countries to withdraw.

Of course, while the agreement is a historic step in the right direction, much work still remains to be done.

Apart from the fact that each country’s target for emission reduction is voluntary and there is no enforcement if a target is not met, Fabius has pointed to the need to tackle emissions from aviation and maritime transport, which were omitted from the UN talks, and which he said are urgent. He also called for a renewed focus on the possibility of putting a price on carbon, pointing to a Chinese plan to institute a national system of carbon trading from next year.

“We have to avoid being lazy. We have to be calm, and to be hopeful,” he says. �

Malaysia’s IOI Corporation Berhad (IOI) has decided

not to sue the Roundtable on Sustainable Palm Oil (RSPO), which suspended IOI on 1 April following a year-long investigation into allegations that it had failed to protect forests and peat areas.

IOI had announced on 9 May that it was filing a challenge in the Zurich District Court of Switzerland against its suspension.

However, on 6 June, IOI said it would be withdrawing its lawsuit.

“Since the filing of the challenge, IOI has engaged with many of our stakeholders – such as customers, NGOs and the RSPO – to resolve the matter,” said CEO Dato’ Lee Yeow Chor.

IOI had agreed to an action plan to adopt the RSPO’s highest level of accreditation – the Next certification system – by the end of this year, he said.

Following the RSPO’s suspension, major food companies such as Nestlé, Mars, Unilever and Kelloggs dropped IOI as a supplier.

Lee previously said the suspension had affected IOI’s current RSPO contract commitments and had caused significant disruption to certain parts of the European and American food manufacturing sector.

“Our appeal was principally made on two aspects of the suspension decision: one is that the decision should not cover the downstream processing units which are certified under a different set of rules; another is that the decision should not affect existing certified palm oil purchase and sales contracts which have already been entered into prior to the suspension decision.”

Lee said that since the suspension, IOI has had several discussions with the complainant, conducted a four-day field verification visit with Global Environmental Centre (GEC) – a specialist firm in peat and high conservation value matters – and had started to implement the improvement measures suggested by GEC.

IOI grows and processes palm oil, with some 152,000ha of oil palm plantations in Malaysia and 83,000ha in Indonesia. It is also the largest oleochemical manufacturer in Asia, and has a speciality fats business operated under Loders Croklaan.

The RSPO said it would not comment on IOI’s announcement that it was dropping the lawsuit until the legal case was officially dropped in a conciliatory hearing scheduled for 14 June, the Guardian newspaper said.

Senate scraps palm oil taxOn 12 May, the French Senate scrapped a controversial tax on palm

oil when it adopted a revised version of its biodiversity bill, reports Reuters.

The Senate had earlier approved the €300/tonne palm oil tax on 21 January to encourage sustainable practices in the palm oil sector but the proposal was widely condemned by leading producers, Indonesia and Malaysia.

In March, the National Assembly approved the tax, but sharply reduced its level to start at €30/tonne, and excluded oils produced in a sustainable way (see News, OFI May 2016).

Reuters said the latest version of the biodiversity bill adopted by the Senate scrapped the additional tax on palm oil altogether, with senators saying it could be against international trade rules and that it would be more appropriate in a finance legislation.

However, the decision was not final as the two houses of the French parliament now had to reach an agreement, or the bill would end up at the National Assembly, which had the final word, the report said.

Malaysia and Indonesia have both said the tax is discriminatory, and Indonesia raised the issue at the World Trade Organization in March.

France imports about 100,000 tonnes/year of Indonesian palm oil and bought 11,000 tonnes of Malaysian palm oil last year, Reuters has reported.

June Comment and News.indd 1 13/06/2016 11:12

Ruchi Soya and Adani Wilmar form joint venture in IndiaIndia’s Ruchi Soya and Adani Wilmar

announced on 25 May that they plan to set up a joint venture to tap into the country’s rising food demand and purchasing power.

The joint venture will have the exclusive right to originate, market and distribute finished products from both companies including oilseeds and vegetable oils, derivatives and by-products; soya foods, by-products and all other food products; oleochemicals; biodiesel; grains; and castor oil and derivatives.

Adani Wilmar will own 66.66% of the joint venture and Ruchi Soya the remaining 33.34%.

They said integrating activities would help realise savings in origination, distribution, handling and sales.

Adani Wilmar and Ruchi said the joint venture was conceived looking at India’s complex agricultural environment, where declining farm productivity was occurring in the

face of rising consumption patterns.This mismatch could be partially eased by

optimising and improving the supply chain networks of both groups, they said.

“We are very bullish on Indian demand for high quality food products due to population and economic growth,” said Kuok Khoon Hong, chairman and CEO of Wilmar.

Adani Wilmar is a joint venture between Indian multinational, the Adani Group, and Asian agribusiness giant Wilmar International. It currently owns refineries in 17 locations across India, has eight crushing units and 18 toll packing units, amounting to a refining capacity of over 10,400 tonnes/day, seed crushing capacity of 7,400 tonnes/day and packaging capacity of 9,000 tonnes/day, according to World-Grain.com.

Ruchi Soya is India’s largest manufacturer of edible oils, vanaspati, bakery fats and

soya foods (see company profile, OFI January 2015). According to Ruchi, it has over 6,000 distributors covering 600,000 retail outlets. It has 4.02M tonnes of oilseed extraction capacity in 11 locations; 2.99M tonnes of edible oil refining capacity in 14 locations; 0.52M tonnes of palm fruit processing capacity in two locations; 0.52M tonnes of vanaspati and bakery fats manufacturing capacity in seven locations; and 3.29M tonnes of soya meal production capacity in 11 locations. � In May, Ruchi Soya reported a net loss of Rs 891.29 crore (US$13.35M) for the 2016 year ending on 31 March, compared with a Rs 60.93 crore profit (US$912M) in 2015. “Performance was adversely impacted by sustained pressure in the global commodities market, a weak and erratic monsoon, foreign exchange fluctuations and the overall economic downturn,” the company said.

Molinos Rio de la Plata – one of Argentina’s largest branded food products company – will

invest US$70M to expand its soya operations in San Lorenzo, Santa Fe, Argentina’s cabinet chief Marcos Peña announced at a press conference on 29 April.

The investment would expand storage for soyabeans and meal, enhance cereals operation and increase annual processing to 6M tonnes of oilseeds and 2M tonnes of exports, World-Grain.com said.

The company was also investing an additional US$3.5M in working capital to improve logistics and add space for processing and handling grain exports.

Argentinean officials said the investment was

the result of new government policies designed to promote economic growth in Argentina including the removal of export quotas; the scrapping of export taxes on wheat, corn, soya meal and soya oil exports; a cut in soyabean export taxes; and the floating of the peso.

Work on the San Lorenzo plant would begin in three months and take some two years to complete.

Molinos Río de la Plata is a large exporter of sunflower oil and one of Argentina’s main exporters of bottled oil. It also produces a wide range of packaged foods for domestic consumption including bottled oil, margarine, pasta and frozen foods.


NEWS

INDIA: Consumer products giant Hindustan Unilever (HUL) has split its foods and refreshments business into two separate divisions as it faces mounting pressure from established local rivals such as Dabur India, Marico and ITC, Nikkei Asian Review reported on 3 June.

The Indian unit of Anglo-Dutch consumer giant Unilever Plc makes branded products ranging from soaps to ice-creams.

Its foods segment represented its biggest opportunity but was its weakest performer, the report quoted ICICI Securities as saying. Although HUL had strong brands in foods, it had been unable to establish itself in the higher growth segments of packaged food, such as noodles, dairy and biscuits, ICIC said.

LATIN AMERICA: On 1 June, Unilever announced it had agreed to sell its AdeS soya beverage business for US$575M to Coca Cola. The AdeS brand is currently present in Argentina, Bolivia, Brazil, Chile, Colombia Mexico, Paraguay and Uruguay.

USA: Cargill said on 2 May that it has agreed to sell its Dressing, Sauces and Mayonnaise (DSM) business to Ventura Foods, with completion of the transaction expected in the second quarter of 2016. Ventura Foods produces custom and proprietary dressings, sauces, mayonnaises, oils and other flavourings.

IN BRIEF

Singapore’s Olam International announced on 1 June that

it had paid US$24M to buy the remaining 50% stake in Acacia Investments it does not already own with its joint venture partner.

On completion of the acquisition, expected in June, Acacia will become a wholly owned subsidiary of Olam.

Acacia had a significant presence in edible oils refining and distribution in East Africa, Olam said.

“The acquisition allows us to consolidate all our edible oils operations in Mozambique and realise synergies in distribution and brands,” said Olam managing director and CEO of its palm and rubber businesses, Ranveer Chauhan.

Olam supplies ingredients, processed and packaged products including edible nuts, coffee, cocoa, sugar, grains, edible oils and spices, with palm oil plantation interests in Africa.

Olam buys out Africa’s Acacia

New soya crush capacity for ADMArcher Daniels Midland

Company (ADM) announced on 2 June that it had successfully started up new soyabean crushing capacity at its oilseeds plant in Straubing, Germany (pictured) and is now looking at further expanding its soya crushing options at other facilities in northwest Europe.

“The future of crushing soyabeans in Europe looks healthy, and we are looking very closely at where we can best expand crush in Europe,” said Jon Turney, general manager, ADM European soybean crush.

“We see scale, due to the marginal cost per tonne, as a key for our continued success as a destination soya crusher in order to ensure we are able to compete with origin crushers importing meal into the region. Adding switch capability to our plants allows us to utilise our assets more towards the protein markets when EU oil markets are under pressure.”

ADM said Straubing’s new capacity allowed the site to crush soyabeans sourced from the Danube region in order to market European non-GMO soya meal and oil to customers in Western Europe.� In May, ADM released its first quarter 2016 results ending 31 March, reporting “challenging market conditions particularly affecting agricultural services”, which had an operating profit of US$76M, down from US$118M in the same quarter in 2015. Oilseeds operating profit was US$261M, falling US$231M from strong results a year ago.

Molinos to expand soya operations in San Lorenzo


NEWS

WORLD: Eleven of the world’s largest food and beverage companies including Kelloggs, Mars, Nestlé and Unilever, have pledged to phase out industrially-produced trans fat by the end of 2018 at the latest.

The members of the International Food & Beverage Alliance (IFBA) said they had agreed a common global objective to reduce trans fatty acids (TFAs) in their products to nutritionally insignificant levels (less than 1g of trans fat per 100g of product) worldwide.

As well as Kellogg, Mars, Nestlé and Unilever, other members of the IFBA are the Coca-Cola Company, Ferrero, General Mills, Grupo Bimbo, McDonald’s, Mondelez International and PepsiCo.

CHINA/BRAZIL: China’s Hunan Dakang Pasture Farming Co Ltd has bought a controlling stake in Brazilian grains company Fiagril Participações SA, the latest effort by Chinese merchants to secure future food supply in Brazil, Reuters reported at the end of April. Sources quoted by the news agency said the Chinese firm bought a 57% stake in Fiagril in a deal worth around US$290M.

Fiagril operates grain trading and processing operations and is based in Mato Grosso state. The deal did not include Fiagril’s shipping, biofuels and seed production units, Reuters said.

USA: TerraVia (formerly Solazyme) and Bunge Ltd announced on 4 May that they are launching a sustainable DHA speciality feed ingredient based on algae targeting the aquaculture market, which currently spends around US$3bn in omega 3 ingredients.

AlgaPrime DHA will be produced at the companies’ joint venture facility in Brazil, where full product scale-up was reached in late 2015.

IN BRIEF EFSA sounds warning on process contaminants in vegetable oils


Sustainable palm buyers can help specific producers

Glycerol-based process contaminants found in palm and other vegetable oils, margarines

and some processed foods raise potential health concerns for younger consumers and for people who consume a high amount of these products, the European Food Safety Authority (EFSA) said on 3 May.

The EFSA assessed the health risks of glycidyl fatty acid esters (GE), 3-monochloropropanediol (3-MCPD), and 2-monochloropropanediol (2-MCPD) and their fatty acid esters. The substances form during food processing, particularly when refining vegetable oils at high temperatures of around 200°C.

“The highest levels of GE, as well as 3-MCPD and 2-MCPD (including esters), were found in palm oils and palm fats, followed by other oils and fats,” the EFSA said. “For consumers aged three and above, margarines, pastries and cakes were the main sources of exposure.”

The EFSA’s expert Panel on Contaminants in the

Food Chain (CONTAM) considered information on the toxicity of glycidol (the parent compound of GE), assuming a complete conversion of the esters into glycidol following ingestion.

“There is sufficient evidence that glycidol is genotoxic and carcinogenic, therefore the CONTAM Panel did not set a safe level for GE,” said Dr Helle Knutsen, chair of the CONTAM Panel.

The panel concluded that GE is a potential health concern for all younger age groups with average exposures, and for consumers with high exposure in all age groups. “The exposure to GE of babies consuming solely infant formula is a particular concern,” said Dr Knutsen.

It set a tolerable daily intake (TDI) of 0.8 micrograms per kilogram of body weight per day for 3-MCPD and its fatty acid esters. Toxicological information was too limited to set a safe level for 2-MCPD.

Buyers of palm oil can now choose to support specific,

named producers when purchasing GreenPalm certificates, which now include the name, address and GPS location of the sustainably certified mill trading each certificate, GreenPalm announced on 8 June.

Previously, Roundtable on Sustainable Palm Oil (RSPO)-certified mills submitted their certificates for sale into a collective pot on the GreenPalm

trading platform market. Account names were known, but buyers received no mill transparency

“Now, buyers can select the RSPO-certified grower or mill they wish to support via GreenPalm’s off-market deal facility, or can focus their sustainable sourcing on a particular geographical area,” GreenPalm said.

GreenPalm enables buyers to off-set their purchases of palm oil, palm kernel oil or palm kernel expeller by paying the producer for

an equivalent volume of RSPO-certified material.

“This is currently the only route for some buyers of palm fractions and derivatives to source certified sustainable palm products,” GreenPalm said.

“GreenPalm is also the only practical way to support the estimated 40% of palm producers who cannot export to countries, and certified growers or mills that cannot sell physical material into the segregated supply chain.”

GrainCorp to close crushing siteAustralian oilseed crusher

GrainCorp announced at the end of April that it is shutting down its Riverland Oilseeds canola crushing site at Millicent, South Australia in late September.

The firm said the 100 tonnes/day plant – its smallest canola crushing site – was too far from customers and not big enough.

The announcement comes in the wake of the closure of its Brisbane oil refining and packing plant.

GrainCorp has been restructuring its oils business, spending US$61M to upgrade its new vegetable oil refining, packing and bottling lines for spreads, oils and dressings in Melbourne (see News, OFI May 2016). Work to upgrade its Numurkah plant in northern Victoria to produce refined food

grade canola oil has just finished, and it is building 25% more capacity into the site, which will have a canola crush capacity of 240,000 tonnes/year.

GrainCorp also recently upped crushing capacity at its West Australian oilseed crushing site at Pinjarra to 200 tonnes/day.

“While we are investing to grow our edible oils processing capability in Australia, we are also seeking to maximise our efficiency to keep Australian oils and meals competitive,” general manager of supply chain and operations Doug Belavic said.

GrainCorp acquired the Millicent, Pinjarra and Numurkah plants from vegetable oil crusher and storage company Gardner Smith for US$268M in 2012 as part of a bigger US$361M deal incorporating the purchase of Integro Foods, said The Land.

Commodity giant Glencore is in talks to sell a further

9.9% stake in its agriculture unit, following its agreement to sell a 40% stake to Canada Pension Plan Investment Board (CPPIB) in April, says Reuters.

The report quoted two sources who said Glencore was negotiating with bidders that missed out on the 40% sale.

Bidders for the 9.9% stake – valued at some US$625M – included a Canadian pension fund, state-backed Saudi Agricultural and Livestock Investment Co and Qatar’s sovereign wealth fund, Reuters said.

On 6 April, Glencore confirmed it had sold a 40% stake in its agriculture unit for US$2.5bn to CPPIB (see News, OFI May 2016).

Glencore has been restructuring to reduce its debt.

Glencore may sell a further stake

CORRECTIONIn the March/April issue of OFI, a ‘Brief’ on page 4 on the European Food Safety Authority Panel of Contaminants giving a positive opinion on the use of detoxified jatropha kernel meal in animal feed should have been labelled ‘Europe’, not ‘China’.


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On 18 May, the US Environmental Protection Agency (EPA) proposed increases in renewable

fuel volumes for all types of biofuels for 2017 under the country’s Renewable Fuel Standard (RFS) programme.

The agency proposed a total renewable fuel volume of 18.8bn gallons for 2017, covering cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel. The EPA also proposed volume requirements for biomass-based diesel for 2018.

Total renewable fuel volumes would grow by nearly 700M gallons between 2016 and 2017, the EPA said. Advanced renewable fuel – which requires 50% lifecycle carbon emissions reductions – would grow by nearly 400M gallons between 2016 and 2017.

The non-advanced or ‘conventional’ fuels portion of total renewable fuels – which requires a minimum of 20% lifecycle carbon emissions reductions – would

increase by 300M gallons between 2016 and 2017 and achieve 99% of the Congressional target of 15bn gallons. Biomass-based biodiesel – which must achieve at least 50% lifecycle emissions reductions – would grow by 100M gallons between 2017 and 2018. Cellulosic biofuel – which requires 60% lifecycle carbon emissions reductions – would grow by 82M gallons or 35%, between 2016 and 2017.

The EPA proposal would establish a 2.1bn gallon biomass-based diesel requirement in 2018, up from the 2bn gallon requirement for 2017.

The EPA said the proposals would be open for public input and comment until 11 July.

Although Michael McAdams, president of the Advanced Biofuels Association described the proposed rule as “good news” for the advanced, biomass-based diesel and cellulosic pools, others said the proposal did not go far enough.

The National Biodiesel Board said the proposal “significantly understates the amount of biodiesel this industry can sustainably deliver to the market”, and that the “EPA can easily call for at least 2.5bn gallons in 2018 after nearly 2.1bn gallons of biodiesel were delivered under the RFS in 2015”.

BIOFUELS NEWS

CHINA/USA: Chinese state-owned agricultural trader COFCO has set up a US trading desk for ethanol in order to get a foothold in the USA, Reuters reported on 26 May. According to the report, COFCO hired Aaron Parrish, an ethanol trader from Louis Dreyfus to join its Stamford, Connecticut office earlier in May. The move was COFCO’s first venture into US biofuel trading, and seen as a bid to capitalise on trade between the USA and Brazil.

BRAZIL: ADM announced on 25 May that it had completed the sale of its sugarcane ethanol operations in Limeira do Oeste, in Minas Gerais state, which was deemed “unlikely to meet its long-term returns objective”. In Brazil, ADM processes soyabeans in five facilities, and sunflower at another, and markets the bottled oil brands Concórdia, Corcovado and Vitaliv. It also operates the largest biodiesel plant in Brazil.

EUROPE: The closure of bankrupt Spanish biofuel producer Abengoa’s plant in Rotterdam has been confirmed, Platts reported on 9 May.

The closure reduced Europe’s domestic ethanol supply by 480,000m3/year, which was on top of the 641,000m3/year already lost through other closures including CropEnergies’ Ensus plant in Wilton, UK and another Abengoa plant in Salamanca, Spain. Together these took the total EU ethanol outages to 1.12M m3/year.

INDONESIA: The Indonesian Oil Palm Estate Fund has signed a contract with biodiesel producers to make 1.53M kilolitres of biofuel between May and October this year to supply Pertamina and PT AKR Corporindo, The Jakarta Post reported on 3 May. Biofuel blending increased from 15% to 20% this year and producers currently had a capacity of 9M kilolitres/year.

MALAYSIA: The Plantation Industries and Commodities Ministry said on 31 May that the country’s biodiesel mandate would rise to 10% for the transport sector and 7% for the industrial sector beginning June.

SOURCE: TRANSPORT & ENVIRONMENT / FEDIOL

IN BRIEF EPA proposes 18.8bn gallons of biofuels blending for 2017

Shell creates new division for renewable activities Europe’s largest petroleum

company, Shell, has established a separate division to invest in renewable and low-carbon power called New Energies, the Guardian newspaper reported on 15 May.

The New Energies division would bring together existing hydrogen, biofuel and electrical

activities, as well as a new drive into wind power, the report said.

New Energies already had US$1.7bn capital investment attached to it, with annual capital expenditure at US$200M.

Experts at think-tank Chatham House had warned international petroleum companies just days before Shell’s news was reported

that to avoid a “short, brutal” end within 10 years, they had to transform their businesses.

However, at Shell’s annual meeting on 24 May, 97% of shareholders rejected a resolution to invest profits from fossil fuels to become a renewable energy company.


Renewable Fuel Volumes Requirements for 2014-2018

2014 2015 2016 2017 2018

Cellulosic biofuel (M gallons) 33 123 230 312* n/a

Biomass-based diesel (bn gallons) 1.63 1.73 1.90 2.00 2.1*

Advanced biofuel (bn gallons) 2.67 2.88 3.61 4.0* n/a

Renewable fuel (bn gallons) 16.28 16.93 18.11 18.8* n/a

(*Proposed Volume Requirements)

Green group Transport & Environment revealed in May

that 45% of all the palm oil used in Europe in 2014 was utilised as biodiesel, according to data from EU vegetable oil industry association Fediol.

In 2010, the percentage of palm oil used as biofuel in Europe was just 8%. All of the 34% growth in biodiesel consumption in Europe since 2010 has come from imported palm oil.

Transport, power and heating took up 60% of Europe’s total palm oil consumption in 2014.

The use of palm oil for non-

energy purposes, such as food, cosmetics and animal feed

declined by more then 20% between 2010 and 2014.

Nearly half of all palm oil in Europe used for biodiesel

WHERE PALM OIL GOES IN EUROPE

June Biofuel News.indd 1 13/06/2016 11:55

BIOFUELS NEWS


Sofiproteol cuts back biodiesel productionDue to lower than expected demand,

France’s Avril Sofipreteol announced on 21 April that it would cut its biodiesel production this year, says Biofuels Digest.

Demand was expected to be 928,000 tonnes this year, compared to 1.5M tonnes last year, with the fall in demand was attributed to a several factors, including higher rapeseed prices, instability in the demand structure from unstable EU biodiesel blending policies, competitive drop-in biomass-based fuels and overcapacity in the EU biodiesel market, Biofuels Digest said.

Court annuls EU’s anti-dumping duty on US ethanolThe European Court of Justice

(ECJ) has annulled the European Union’s (EU) 9.5% anti-dumping duty on all ethanol imported from the USA, which has been in place since February 2013.

The decision affects imports by four US producers: Patriot Renewable Fuels, Plymouth Energy, Poet and Platinum Ethanol, according to Reuters.

The ECJ ruled on 9 June that the anti-dumping duty of US$83.03/tonne was invalid because the European Commission (EC) was required by EU law to give each sampled US company its own anti-dumping rate, Biofuels International said.

“It found that the EU should have imposed individual dumping duties for these producers instead of applying a general country-wide

duty,” said ePure, the European renewable ethanol association.

In May 2013, the US Renewable Fuels Association (RFA) and Growth Energy filed a joint complaint against the duty, citing 10 violations of established trade law.

Biofuels International said that before the duty was imposed, the EU had represented a 300M gallon market for the US ethanol

industry.The EU now has approximately

two months to file an appeal against the ruling.� The EU filed an appeal on 20 May against the World Trade Organization’s (WTO) March ruling in favour of Argentina over the EU’s anti-dumping duties on biodiesel imports from the country (see also Biofuels News, OFI May 2016).

EC refers Poland to EU Court of Justice over REDThe European Commission (EC) has referred

Poland to the EU Court of Justice for failing to fully comply with the EU Renewable Energy Directive (RED), according to an EC press release.

“Firstly, fuels can only be marketed if specific fuel requirements are in place but such requirements do not exist for hydrotreated vegetable oil (HVO), a biofuel imported into Poland,” it said.

“Secondly, preferential treatment is given to fuel operators who source at least 70% of their biofuels from Polish manufacturers and when the biofuels are produced predominantly from raw materials originating in certain countries.”

The RED requires all member states

to ensure that at least 10% of all energy consumed in transport comes from renewable sources. Biofuels can be used to meet this target but must meet the REC’s sustainability requirements.

Member states must also treat sustainable biofuels and their raw materials equally, regardless of their origin.

The EC said it had sent Poland a letter of formal notice in February 2014 over its concerns, followed by a reasoned opinion in April. “However, the Polish authorities have still not completely addressed the EC’s concerns. Therefore the Commission deems it necessary to refer the case to the Court of Justice.”

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June Biofuel News.indd 2 13/06/2016 11:55

Report withdrawn

Monsanto rejects Bayer’s US$62bn bid


BIOTECH NEWS

The world’s largest seed company, Monsanto Co, has turned down a US$62bn

acquisition offer from German chemical and pharmaceutical multinational Bayer AG on 24 May, saying it was “incomplete and financially inadequate”, Reuters reports.

A deal would have created the world’s largest supplier of seeds and farm chemicals.

Monsanto chief executive Hugh Grant said “the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory

execution risks relating to the acquisition”.Bayer said it looked forward to engaging

in constructive discussions with Monsanto, which said it was open to engage in further negotiations.

A Monsanto-Bayer combination was unlikely to raise significant anti-trust hurdles because there was little overlap in the companies’ products, analysts said in a Bloomberg report.

Monsanto owns the Roundup brand herbicide, while Bayer CropScience has products in crop protection, seeds and plant biotechnology.

The crop chemicals industry has recently experienced a wave of consolidation, with Dow Chemical merging with DuPont, and China National Chemical Corp bidding US$43bn in February to acquire Syngenta AG. Monsanto’s US$45bn bid for Syngenta failed last year.

With a global slump in agricultural commodities hurting demand for products, a deal with Bayer would help Monsanto reduce its reliance on the agriculture industry, while Monsanto would strengthen Bayer’s seed business, one of the company’s priorities, the Bloomberg report said.

WORLD: BASF’s Crop Protection division announced it had put into operation a new R&D centre at its headquarters in Limburgerhof, Germany, on 21 April. The centre will house two research areas – biological crop protection and seed solutions. In February, BASF had announced it would be halving the 700 jobs at its plant biotechnology research unit – 140 in North American and 180 in Europe.

Research and field sites in Belgium, Brazil, Germany, and the USA would be reduced in size and field testing sites in Hawaii, India and Puerto Rico would be closed, with restructuring expected to be completed by the end of this year. Plant biotech research would focus on high potential projects in herbicide tolerance and fungal resistant soyabean. The project on polyunsaturated omega-3 fatty acids in canola seeds would be continued; and yield and stress collaboration agreement with Monsanto on corn and soyabeans was not affected. However, rice yield and corn fungal resistance projects would be discontinued.

BRAZIL: US biotech company Ceres Inc announced on 2 May that it had received approval to field-test its biotech sugarcane in Brazil, with trials expected to start by mid-June.

Ceres will test biomass, sugar yield and stress tolerant traits in several commercial sugarcane cultivars adapted to Brazil’s major production areas. It said in similar trials performed outside Brazil last year, plants with drought resistant traits maintained biomass yields with half the water usually required.

IN BRIEF

Concern over import of GM soya The Soybean Processors

Association of India (SOPA) has urged the government to investigate the possible import of GM soyabeans into India which may be breaking plant quarantine and environmental regulations, reports the Financial Express.

“It has come to our knowledge that soyabean is being imported into India from various countries,” D N Pathak, SOPA executive director, wrote in a 6 May letter to the Union Minister for Environment, Forest and Climate Change. “We request immediate investigation into all soyabean imports to ensure that plant quarantine and environmental regulations are strictly followed.”

The Financial Express said separate regulations governed the import of soyabean seeds for sowing and for consumption or processing. The import of GM food

items also required approval from the Genetic Engineering Appraisal Committee (GEAC).

“To the best of our knowledge, none of the plant quarantine conditions has been fulfilled by the importers and approval of GEAC has also not been obtained for the import of any GM soyabean,” Pathak wrote.

Currently, Bt cotton is the only GM crop approved for commercial cultivation in India.

Last August, GEAC authorised field trials of GM rice, mustard, chickpea and brinjal, the Solvent Extractors’ Association (SEA) said in its February newsletter.

However, in February, GEAC deferred a decision on the cultivation of a GM hybrid mustard, the Indian Express said. It was holding public consultations and the hybrid was due back at GEAC for approval by the end of May.

Monsanto will not launch new seeds in ArgentinaMonsanto has cancelled plans to launch new

biotech soyabeans in Argentina and may withdraw other seeds already sold there in an escalation of its dispute over royalty payments for its seed, the Wall Street Journal (WSJ) reported on 17 May.

The US biotech giant argues that royalty collection is essential to make a profit and under its terms of use for its seeds, known as Intacta Soy, farmers have to pay royalties when purchasing the seed or when selling their crop to grain elevators and export terminals. A clause allows Monsanto to inspect shipments for the presence of its Intacta technology to assess royalty charges, which farmers, traders and exporters have branded illegal.

In April, President Mauricio Macri’s Agricultural Ministry banned all tests on grain shipments without prior government approval and its request for more time to push farmers to pay royalties was rejected by Monsanto.

Monsanto now says it will not launch new soyabeans in Argentina, called Roundup Ready 2 Xtend, which are engineered to resist a more

powerful weedkiller and which it had planned to begin selling in October.

It will continue selling Intacta RR2 seeds, engineered to withstand glyphosate herbicide and repel worms, but is considering its position in the country.

“We are doing a full review of our business plans there,” Michael Frank, chief commercial officer for Monsanto, told an investor conference, according to a WSJ report on 10 May. “We will be very diligent in our efforts to secure our investments and intellectual property there.”

The newspaper said Argentina was one of the biggest overseas markets for US agricultural firms, growing about 13.6% of the world’s GM crops last year. Its purchases of seeds and pesticides generated about 5.8% of Monsanto’s US$15bn in sales in fiscal year 2015.

Monsanto has also threatened to leave India over royalty disputes that it, and its local partner, Maharashtra Hybrid Seeds Co (Mahyco) are able to charge for biotech cotton seed royalties (see Biotech News, OFI May 2016).

The US Environmental Protection Agency (EPA) published a

report on 29 April concluding that the weedkiller glyphosate is “not likely to be carcinogenic to humans” but then pulled the report offline just three days later.

The report from the EPA’s cancer assessment review committee was published on the regulations.gov website the EPA manages but was taken down on 2 May, Reuters said.

The EPA said the documents were “preliminary” and were part of its broader review of glyphosate and its potential human health and environmental risks, which was due to be completed by the end of 2016, Reuters reported.

Glyphosate is found in herbicides widely used with GM crops which the World Health Organization last year said was a probable human carcinogen.

Biotech News June.indd 1 09/06/2016 12:50

OFI June p09_lipico.indd 9 10/06/2016 12:48

USA: Leading North American biofuels producer Renewable Energy Group (REG) is expanding its storage capacity for feedstock and biodiesel with its recent US$1.5M purchase of an adjacent Bunge Milling tank complex facility, the company announced on 2 May.

The tanks were being connected to REG Danville’s existing infrastructure and would increase the biorefinery’s storage capacity for feedstock by at least 950,000 gallons and biodiesel by up to 12M gallons.

In July 2015, REG began a separate US$31M upgrade at its multi-feedstock 45M gallon capacity Danville biorefinery to optimise storage and logistics, and add biodiesel distillation capabilities. The upgrade is due to be completed later this year.

CANADA: Grain shippers and farm groups are calling for the extension of emergency regulations enacted by the government in response to major grain transportation bottlenecking during the winter of 2013/14, which are due to expire on 1 August, reports Oilseed & Grain News.

Bill C-30 includes an increase of railway interswitching from 30km of an interchange to 160km. Interswitching is a commercial agreement between railway companies whereby one railway company will carry traffic for the other to ensure that captive shippers (shippers with only one choice of railway) have fair and reasonable access to the rail system at a regulated rate. The Canadian National and Canadian Pacific railways have opposed the legislation since its passing.

IN BRIEF Louis Dreyfus seeks investmentin port logistics in Middle EastGlobal commodity trading group

Louis Dreyfus Company is looking to invest in port logistics in the Middle East, especially Egypt, as the sector continues to lag behind market growth, reports Hellenic Shipping News.

“The markets are growing and in most cases the ports remain largely governmental and have probably been a little bit slower to move than the private sector,” James Wild, head of Louis Dreyfus Middle East and East Africa, told Reuters.

Wild said his company also saw opportunities in Saudi Arabia as the country sought to privatise its grain operations and in post-sanctions Iran.

“We see opportunities with

certain countries opening up both from a sanctions perspective like Iran and also from potentially a privatisation programme with Saudi Arabia, both of which provide volume which is important for us,” he said on the sidelines of the May Global Grain conference in Dubai.

Wild added that it was too early to tell whether Louis Dreyfus would actively seek a stake in the Saudi Grains Organization (SAGO), which was looking to sell a stake to a strategic buyer as part of its privatisation.

Saudi Arabia was considering privatising various state bodies under its Vision 2030 economic reform plan announced in April, aimed at reducing the kingdom’s

reliance on oil, the report said.Louis Dreyfus – in the midst of

a leaership shake-up – announced a reduction in its board size from seven to five on 19 May, with former CEO Serge Schoen and former Goldman Sachs managing director Steven Wirsch stepping down, Reuters reported.

Like other commodity traders, Louis Dreyfus was now grappling with ample supply, lower prices and slower economic growth that had cut margins and prompted firms to refocus, Reuters said.

In March, Louis Dreyfus reported net profit dropping 67% to US$211M last year, and it confirmed it was seeking partners to help some of its businesses expand.

Richardson capacity expansion Leading Canadian agribusiness Richardson International Limited

says it has nearly doubled the storage and receiving capacity of its export terminal in North Vancouver following the successful completion of a US$140M expansion project.

Richardson added an 80,000 tonne grain storage annex to its terminal, increasing storage capacity to 178,000 tonnes, and also upgraded its rail yard and receiving system.

“The terminal now has the ability to handle in excess of 6M tonnes/year to meet growing demand for Canadian grains and oilseeds,” it said.

Expansion work began in September 2013 and concluded earlier this year. Richardson said that despite the construction, the terminal managed to set a new handling record, shipping 5.2M tonnes of grain in 2015, against a typical year of 3M tonnes.

“Our Vancouver expansion was a significant investment to ensure we have the appropriate capacity on the West Coast,” said Curt Vossen, president and CEO of Richardson International. “We have positioned ourselves globally to efficiently move Canadian grains and oilseeds to emerging markets in Asia-Pacific and other areas.”

Richardson is a worldwide handler and merchandiser of all major Canadian-grown grains and oilseeds and a vertically-integrated processor and manufacturer of oats and canola-based products.


TRANSPORT & LOGISTICS NEWS

Van den Bosch completes joint venture with Aspen InternationalGlobal logistics provider Van den Bosch

has concluded a joint venture with South Africa’s Aspen International (pictured), opening two new sites in Cape Town and Dubai, the company announced on 12 May.

“The main focus is on shipping liquid bulk products (food as well as chemicals) in tank containers in cooperation with Van den Bosch DMCC in Dubai,” the firms said. “The business includes shipping liquid bulk products in flexitanks, palletised dry goods in 6m and 12m general purpose containers, and perishable goods in reefer tanks and containers.”

Director Peter van den Bosch said the

cooperation was another new step ahead in the African market. “We believe in Africa’s potential and want to further develop this growth market. We have built a strong network in the past few years and we are now shipping various liquid bulk goods from, to and in Africa.”

The Dutch Van den Bosch group is active in the European oils and fats market, acting as a bulk supply chain partner for refiners such as IOI, Cargill, and Sime Darby (see OFI Transport & Logistics News, Nov/Dec 2015). It said the African continent offered many opportunities in loading edible oils and fats and volumes between Europe and Africa were growing.

New Ukraine tank farm for palm oil Ukrainian bulk liquid edible

products terminal LLC NE Terminal UPSS is planning to put a new 41,000 tonnes tank farm into operation this year to handle imported palm oil, reports APK Inform.

The company is located in Mykolayiv, southern Ukraine, at the deep-sea port of Dnepro-Bugskiy.

The port complex handles a range of cargoes including vegetable oils, molasses, palm oil, ethanol, glycerine, meal and cake, offering transshipment of bulk food cargoes and exports of molasses and vegetable oils.

It has a total storage volume of 143,000m3 with five terminals, each with a storage capacity of 25,000-40,0000 tonnes, separate pumping house and pipelines.

June Transport News.indd 1 14/06/2016 11:31


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USA: Procter & Gamble announced on 19 May that it had launched its first bio-based detergent, Tide purclean, which it says has a 65% bio-based formula. It said the detergent was produced at a zero manufacturing waste to landfill site using 100% renewable wind power electricity and a bottle that was also 100% recyclable. The detergent will carry the USDA Certified Biobased label. CANADA/USA: Canada’s S2G Biochemicals announced on 18 April that it had begun commercial-scale production of bio-based glycols at the Memphis site of its operating partner, Pennakem LLC.

S2G’s bio-refining process was integrated into Pennakem’s existing chemical facility to convert non-food waste into usable sugar-based glycols.

“The glycols will serve as a drop-in replacement for common petroleum-based chemicals used in a wide range of consumer and industrial products such as resins, PET/PEF plastic drink containers, cosmetics, pharmaceuticals, coolants and antifreeze,” S2G said. “The economical advantages of integrating our technology into existing facilities will have a significant impact on the business case of bio-based glycols,” S2G CEO Mark Kirby added.

IN BRIEF

Amyris in venture with South Korea’s CJ


RENEWABLE MATERIALS NEWS

Ford developing CO2-based foam and plastics

US industrial bioscience firm Amyris Inc and South Korea-based CJ CheilJedang

Corporation (CJ) announced on 20 May that they had signed an agreement to support large-scale manufacturing of Amyris’s renewable farnesene in existing CJ facilities.

CJ is a Korean-based food, feed and bioscience company and the agreement would allow Amyris to utilise CJ’s manufacturing capacity to support projected demand for products using farnesene.

“The partnership is also expected to include the opportunity for CJ Bio (a division of CJ) to market Amyris products in Asian markets as well as the potential for Amyris to develop several products for CJ Bio,” Amyris said in a press release.

The companies are aiming to complete their agreement by August.

Farnesene is a long-chain, branched hydrocarbon molecule produced by Amyris from the conversion of plant sugars. It has

applications in speciality and performance chemicals, fragrance ingredients, cosmetic emollients, polymers and solvents.

In March, Amyris had said that expected demand for farnesene was beyond the company’s current capacity at its Brotas industrial fermentation complex in Brazil.

It announced an expansion project, expected to start later this year, to add a dedicated flavours and fragrances manufacturing unit to Brotas to meet contracted demand for its flavours and fragrances molecules.

The expansion would allow current Brotas capacity to supply Amyris’s farnesene in the polymers, nutraceuticals and solvents markets through 2020.

Amyris said it entered 2016 with key customer commitments in place which represented a “substantial percentage” of planned production volume at Brotas.

“During the fourth quarter of 2015, Amyris started shipping farnesene for the commercial

production of tyres, adhesives, nutraceuticals and solvents,” it said.

“These applications are expected to consume the full production of Brotas in 2016 and keep the plant capacity sold out through 2020, including the added capacity as a result of the dedicated flavors and fragrances industrial production unit.”

Amyris said its first food ingredients collaboration was successfully underway with plans to begin producing a large-market product for this customer in 2017.

It expects existing collaboration and supply agreements to generate over US$200M in revenue through 2020 from its flavours and fragrances partners (including the five largest fragrance houses in the world) and other industry leading companies.

In January, it announced its first multi-million dollar agreement supplying farnesene to an undisclosed nutraceuticals manfacturer (see Renewable News, OFI March/April 2016).

Ford Motor Company is developing and testing new foam and plastic components using carbon dioxide

as a feedstock which researchers hope to see in Ford production vehicles within five years, reports Green Car Congress.

“Formulated with up to 50% CO2-based polyols, the foam is showing promise as it meets rigorous automotive test standards,” the 16 May report said.

“It could be employed in seating and underhood applications. CO2-derived foam will further reduce the use of fossil fuels in Ford vehicles and increase the presence of sustainable foam in the automaker’s global lineup.”

Ford began working with several companies, suppliers and universities in 2013 to find applications for captured CO2,” Green Car Congress said. This included US-based Novomer, which is commercialising a proprietary catalyst system that transforms waste

CO2 into polymers for a variety of applications, including foam and plastic, which contain up to 50% CO2 by mass.

The report said features of the Novomer catalyst included a moderate CO2-epoxide reaction, occurring at 35°–50°C temperature and 200-300 psi pressure; a fast reaction time at more than 300 times more active than previous systems developed to synthesise aliphatic polycarbonates; and a low catalyst cost that does not use precious metals.

Ford said that it had developed sustainable materials for its products for nearly two decades.

“In North America, soya foam is in every Ford vehicle. Coconut fibre backs trunk liners; recycled tyres and soya are in mirror gaskets; recycled T-shirts and denim go into carpeting; and recycled plastic bottles become Repreve fabric used in the 2016 F-150.”

Cargill acquires NatureWax from Elevance Cargill announced on

16 April that it had acquired NatureWax, a market-leading provider of natural, vegetable-based waxes, to help premium candle makers in North America meet the growing demand for cleaner, non-petroleum-based wax blends.

Cargill is buying NatureWax back from Elevance Renewable Sciences Inc after selling it to the company in 2007.

“As full owner of NatureWax, Cargill will use its global supply chain management strengths and its technical innovation capabilities to provide waxes superior to petroleum-based paraffin alternatives,” the

company said in a press release. “Vegetable-based waxes are

gaining in popularity because they burn cleaner and longer, and

because it is easier to imbue them with fragrances.”

Cargill said that going forward, Elevance would focus its efforts on developing its growing metathesis products business, a technology that creates chemical intermediates from vegetable-based feedstocks more economically than traditional methods.

Cargill supplies vegetable-derived, bio-based industrial products, including personal care products, dielectric fluid, lubricants, detergents, agrichemicals, asphalt and CASE (coatings, adhesives, elastomers, sealants), flexible foams, paints, inks and coatings.

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DIARY OF EVENTS


4-9 SEPTEMBER 2016FOSFA Basic Introductory CourseVENUE: Royal Holloway, University of London Egham, Surrey, UKCONTACT: Anna Baran, FOSFA InternationalUK. Tel: +44 20 7283 5511E-mail: [email protected]: www.fosfa.org/events/middle-managers-course/

20-22 SEPTEMBER 20169th Biofuels International ConferenceVENUE: Ghent, BelgiumCONTACT: Tracy Whitehead, Biofuels International, UKTel: +44 20 8687 4138E-mail: [email protected]: www.biofuels-news.com/conference

19-21 OCTOBER 2016OFIC 2016VENUE: Hotel Istana, Kuala Lumpur, MalaysiaCONTACT: OFIC 2016 Secretariat, c/o MOSTA Malaysia. Tel: +603 7118 2062/2064E-mail: [email protected]: www.mosta.org.my

21-22 OCTOBER 2016PORAM Annual Forum, Dinner, Golf ChallengeLOCATION: One World Hotel, Bandar Utama Selangor Darul Ehsan, Malaysia CONTACT: PORAM, Malaysia. Tel: +603 7492 0006; E-mail: [email protected]: http://poram.org.my/p/wp-content/uploads/2014/01/PORAM-annual-event-A4-2016.pdf

10 NOVEMBER 2016FOSFA Annual DinnerVENUE: Battersea Evolution, London, UKCONTACT: Gemma Hale, FOSFA, UKTel: +44 20 7283 5511E-mail: [email protected]: www.fosfa.org

14-16 NOVEMBER 2016Oilseed and Grain Trade Summit/Organic & Non-GMO ForumVENUE: Hyatt Regency Hotel, Minneapolis, USACONTACT: Sule Basa, HighQuest Partners, USAE-mail: [email protected]: www.oilseedandgraintrade.com orwww.ongforum.org

7 SEPTEMBER 20164th International Conference on “Black Sea Oil Trade”VENUE: Hilton Kyiv Hotel, UkraineCONTACT: Julia Feofilova, UkrAgroConsult Ukraine. Tel: +38 44 4514637E-mail: [email protected]: http://bso.blackseagrainconference.com/en

15 SEPTEMBER 2016High-Oleic Market: Evolution of DevelopmentVENUE: Hotel Alfavito, Kiev, UkraineCONTACT: APK-Inform, UkraineTel: +380 562 320 795, +380 562 321 595E-mail: [email protected]: www.apk-inform.com/en/conferences/sunflower2016/about

12-13 OCTOBER 2016Malaysian Palm Oil Trade Fair & SeminarVENUE: Kuala Lumpur, MalaysiaCONTACT: Mohd Izham Hassan, Malaysia Palm Oil Council. E-mail: [email protected] or [email protected]; Website: www.mpoc.org.my/Palm_Oil_Trade_Fair_and_Seminar_(POTS)_2016_Announcement.aspx

7-10 NOVEMBER 201619th Annual FO Lichts World Ethanol & BiofuelsVENUE: Steigenberger Wiltcher’s Hotel Brussels, BelgiumCONTACT: Informa Agra Customer Services, UKTel: +44 20 3377 3658E-mail: [email protected]: www.worldethanolandbiofuel.com

21-23 SEPTEMBER 2016Globoil 2016 VENUE: Grand Hyatt, Goa, IndiaCONTACT: Tefla’s, IndiaTel: +91 22-26304816/17Email: [email protected]/[email protected]: www.globoilindia.com

28-29 SEPTEMBER 20167th International Oilseeds & Oils 2016VENUE: Barcelona, SpainCONTACT: APK-Inform, UkraineTel: +380 562 320 795, +380 562 321 595 E-mail: [email protected]: www.apk-inform.com/en/conferences/oo2016/about

17-21 OCTOBER 2016National Renderers Association (NRA) 83rd Annual ConventionVENUE: The Ritz-Carlton Amelia Island, Florida USA. CONTACT: NRA, USA. Tel: +1 703 6830 155E-mail: [email protected]: www.nationalrenderers.org

6-8 SEPTEMBER 20163rd High Oleic Oils CongressVENUE: Toulouse, FranceCONTACT: FAT & Associés, FranceTel: +33 567 339 206; Fax: +33 567 339 203Website: www.higholeicmarket.com/hoc-2016

18-21 SEPTEMBER 201614th Eurofedlipid CongressVENUE: International Convention Center (ICC) Ghent, BelgiumCONTACT: Eurofedlipid, GermanyTel: +49 69/79 17533Fax: +49 69/79 17564E-mail: [email protected]: www.eurofedlipid.org/meetings/ghent2016/

For a full listing of oils and fats industry events,

go to: www.ofimagazine.com

26-29 JUNE 20166th International Conference on Algal Biomass, Biofuels & BioproductsVENUE: San Diego, USACONTACT: Elsevier ConferencesUK ; Tel: +44 1865 843 337E-mail: [email protected]: www.algalbbb.com

3-8 JULY 201622nd International Symposium on Plant LipidsVENUE: Paulinerkirche, Göttingen, GermanyCONTACT: Euroefedlipid, GermanyTel: +49 69/79 17533E-mail: [email protected]: www.eurofedlipid.org/meetings/goettingen2016/index.php

13-14 JULY 201613th Oleochem Outlook 2016VENUE: Chengdu, China CONTACT: Cris Zhou, Enmore GroupTel: +86 21 5155 0927E-mail: [email protected]: www.enmore.com

9-10 AUGUST 2016Malaysia-China Palm Oil Trade Fair & Seminar (POTS) VENUE: Tianjin, ChinaCONTACT: Lim Teck Chaii, Malaysian Palm Oil Council; [email protected] or Desmond Ng, E-mail: [email protected]: www.mpoc.org.my/Palm_Oil_Trade_Fair_and_Seminar_(POTS)_2016_Announcement.aspx

18-19 AUGUST 2016Palmex Thailand VENUE: CO-OP Exhibition Centre, Surat Thani ThailandCONTACT: Fireworks Media (Thailand) Co LtdTel: +66 2513 1418; Fax: +66 2513 1419E-mail: [email protected]: www.thaipalmoil.com

June diary 1 page.indd 1 14/06/2016 11:33

Supply upset jolts marketsMuch weaker than expected palm oil prices and the unexpected loss of rain-soaked Argentine soya crops have upset two of the main dynamics driving global oilseed prices in second quarter 2016. But is the equation now moving in a bear or bull direction? John Buckley writes

INTERNATIONAL MARKET REVIEW


If soya were the sole benchmark for oilseed prices, it would appear that the equation is moving in a bullish direction. From a mid-March low of around US$8.50/bushel (about US$312/tonne), prices have soared by as

much as 28% to reach their highest level since September 2014 on the CBOT exchange. That’s quite a contrast to the sub-US$7/bushel scenario some pundits were expecting last autumn, when the USA was harvesting its second record crop in a row and Brazil and Argentina were seen planting their biggest ever acreage.

The main factor has been the disappointing Argentine crop which, back in the early spring, seemed headed for a near-record 59/60M tonnes or more. Following repeated rain deluges, the figure is now seen closer to 55/56M tonnes, maybe even less.

This has already had quite an impact on soya trade, diverting unexpected extra late-season business back to US soyabean exporters and crushers (for meal exports) as well as hoisting the value of the product markets that Argentina normally leads in terms of world export trade. Brazilian soya meal for shipment to Europe, for example, was recently quoted almost a third dearer than it was earlier this year – and that was in US dollars rather than the chronically weak euro (although the latter has had some respite recently, the long-term downtrend seems to all intents and purposes intact – at least until the Brexit vote is cast).

Despite drought spoiling its corn harvest, Brazil is still seen reaping a huge soyabean crop for 2015/16, recently forecast at a record 99M tonnes. That is 2M tonnes up on last year’s but 12M tonnes greater than in 2014/15 and 17M tonnes over the 2013/14 result. Assuming the recovering Brazilian currency does not upset growers’ planting intentions too much this autumn, the next crop is

expected to be around 103M tonnes, rivalling the coming US one. That should be a bearish restraint on the soyabean and broader oilseed markets.

Overall global soyabean production this season overall is seen about 4M tonnes lower than in 2014/15 and at a time when consumption is expected to rise by 16M tonnes. However, this is by no means a tight season thanks to a slowdown in the pace of growth of both soya crush and imports. Also, 2015/16 started with a record global stock (78M tonnes) and, even without growth in new supply, the new 2016/17 season is expected to start this September with a still massive 74M tonnes (the previous three years’ average was just 57M tonnes).

The extra competition for global soya demand – including the projected Latin American crop – is one of the reasons why US exports, despite the recent pick-up, are still running about 4% to 5% down in seasonal terms while its new crop bookings have recently been at their slowest in eight years.

Notwithstanding that, the unexpected downward shunt in soyabean stocks seems to have been enough to lift bullish spirits, not least in the speculative fund camp – which has for some time been long on soya futures, betting on (and probably helping to secure) the price rises that have recently come to pass.

US soyabean ending stocks for 2015/16 – estimated at 12.5M tonnes just two months ago – are now expected to shrink to 8.3M tonnes by end-2016/17 but still over double that carried over in the previous three marketing years. Global soya output in 2016/17 is meanwhile expected to rise by 8.3M tonnes as gains in Brazil, India and other countries outweigh lower US production. World demand is again seen rising slightly faster than supply – if Chinese consumption keeps up. That means world stocks by the end of next season could

be 10M tonnes lower than they started at some 68M tonnes. Even then, these too would still be ample and about 20% larger than the average of the preceeding three seasons.

News that China is still importing record amounts of soyabeans has partially eased fears that its economic troubles would result in lower demand this season and/or next. Other support for firming soyabean prices has come from the rallying Brazilian currency versus the dollar, making it a bit easier for US exporters to sell overseas. Yet it was interesting to see one analyst recently still viewing CBOT beans as low as US$7.60/bushel later this year versus well over US$10/bushel as OFI went to press.

Another reason for CBOT futures’ sensitivity to Argentina’s crop problems has been its own 2016 soya crop outlook, as portrayed by the USDA and other analysts. But this might be described as less bearish rather than outright bullish. Back in its annual March planting intentions report, the department projected sowings falling by half a million acres to 82.2M acres and a partial retreat in yields from last season’s record 48 bushel/acre, equating to a 103.4M tonne crop (versus last year’s near 107M tonnes). Some analysts have also drawn attention to a retreating El Niño weather system raising the odds on a hot dry US summer that might be detrimental to US soyabean crops. With sowing just over half done in late May, there was also the possibility of some rain hold-ups to soyabean sowing although – as these were more affecting earlier-planted corn, it seemed more likely that some extra acres would flow to soya crops instead. Many analysts already believed the USDA was under-estimating planted area, given the relative strength of new crop soya versus maize prices and a lot of possibly uncounted acres that weather prevented planting last year. That could mean the next US crop still turning out close to last year’s record one.

The odd man out in the firming equation has been soyabean oil. CBOT futures for this product are down by almost 9% since the last review went to press in late March. That probably reflects the emphasis on meal-driven crush, releasing the oil as a by-product regardless of demand. Yet it is also at odds with a 22% jump in the benchmark prices for crude mineral oil, upon which biodiesel’s profitability pivots to a large extent. The USDA’s first balance sheets for 2016/17 (starts October for oils) has biodiesel down for consumption of about 2.63M tonnes of soya oil – about 5.5% more than this season. It also has food and other uses of bean oil up by nearly 3% at 6.58M tonnes and as for beans and meal too, it looks for a slightly stronger price scenario for oil than seen so far this season. The USDA also sees total world soya oil use up by about 3.8% or just under 2M tonnes, led by China (+750,000 tonnes).

For much of the past year, it has been this record supply of soyabean oil – priced cheaper than usual versus its competitor oils – that has helped keep prices down across the vegetable oil sector – a boon to consumers at a time of flattening output of rapeseed, sunflower, cottonseed and palm kernel oils and, not least, threatened steep �

FIGURE 1: VEGETABLE OIL PRICES* (MONTHLY AVERAGES)

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INTERNATIONAL MARKET REVIEW


cuts in new supplies of palm oil.

Drastic shift in the palm oil market

The mood in the palm oil market appears to have shifted drastically since the last review. Export trade has not lived up to expectations while production seems to have fallen less steeply than expected in the wake of last year’s El Niño-inspired droughts, and is now starting to rise seasonally.

It may yet falter again, according to some of the plantation houses and other industry observers, before probably picking up more decisively later in 2016. Even so, some of those pundits who seemed most sure about major price rises for palm oil this year are now having to scale back their projections – and quite significantly too.

What seems to have been most under-estimated is the response of importers to firm palm oil prices at a time of record competition from soya oil – offered at far smaller premiums than usual to its main rival palm – to the backdrop of a stagnating global economy.

Malaysia has seen a particularly severe cut in its sales to second largest customer China, which took almost 42% less in the first four months of this year (and was still importing 33% less in April). Strong gains were seen in Malaysian sales to India (+nearly 22%) and the EU (+near 13%) but overall, annual trade was running only 7% up on the year – or 332,000 tonnes. At the same time, January/April production was down by almost 8% or about 778,000 tonnes, so stocks have tightened – but not nearly as much as the doomsayers predicted.

However, stocks could get a lot tighter – if El Niño does have a hidden legacy working through to consistently lower production through the normally peak late summer months or beyond. Estimates have yet to be withdrawn by several respected analysts for a drop in 2016 production of perhaps 1.5M tonnes or more each for both

Malaysia and top supplier Indonesia.A higher Indonesian export tax was expected

to drive some import demand back to Malaysia which re-introduced its own 5% tax on crude palm (since raised to 5.5%) to divert more, cheaper supply to domestic refiners, thereby boosting competitiveness of its value-added palm product exports (which lost share to Indonesia in recent months). Malaysia’s biodiesel sector is meanwhile pushing for a 10% palm oil blend, rising to 20% within the next two years.

The Kuala Lumpur crude palm oil futures market seems to be so far taking a sanguine view of supply/demand prospects, having dropped to a three-month low in ringgit terms in the latter half of May. In US dollar equivalent, the fall is about 14.5% from April’s multi-year highs (over US$710/tonne) taking the price more or less back to where it started in 2016, if still about 38% above 2015’s summer lows (see Figure 2, above).

The descent has probably also been influenced by more acceptance that the biodiesel outlet – for reasons quoted in past reviews (distribution and engine running issues) – may not grow quite as rapidly in origin countries as expected.

Hopefully, the next few months should shed more light on how these supply/demand factors are evolving.

Rapeseed season tight in Canada

ICE canola futures recently hit 10-month highs – up 20% from their March lows – as domestic crush maintained 12.5% year-on-year growth and farmers held back supplies for better prices. Markets also noted EU crop forecasting body MARS reducing its average yield estimate for the coming crop by about 1.8% from the earlier 3.35 tonnes/ha – not a big adjustment but a reminder of another relatively tight season ahead.

While some rain appears to be relieving affected

parts of the Canadian prairies as OFI went to press, dry, cool weather has held back crops and in some areas, even left them at risk of frost damage.

The ICE contract was also lifted by Statistics Canada’s latest stock report showing under 7.5M tonnes left against 8.33M tonnes this time last year, under-scoring the need for a decent 2016 crop. The USDA’s first take on world rapeseed markets for 2016/17 has Canada’s crop falling to 15.5M tonnes from last year’s 17.2M tonnes. It also has the EU at 21.8M tonnes against 2015’s 22.05M tonnes and 2014’s 24.6M tonnes and Ukraine’s at 1.3M tonnes versus 2015’s 1.74M tonnes and 2014’s 2.2M tonnes. Australia’s crop on the other hand is seen up 300,000 tonnes at 3.3M tonnes. India’s crop is seen 900,000 tonnes up at 6.8M tonnes but China’s down 1M tonnes to 13.3M tonnes. That left world output down by about 2M tonnes to a four-year low of 66M tonnes, implying another year of tightening stocks and firm prices.

The exception to this is China – not only the world’s largest importer/consumer of rapeseed and oil, but its biggest stockholder. (The USDA estimates it started this season with 4.2M tonnes of rapeseed oil – about 75% of world stocks although other observers say the reserve is closer to 2.8M tonnes (see Figure 3, left). Amid its broader economic challenges, the Chinese government is currently trying to rationalise its approach to stocking and the price support behind it – a shift that may hit imports of maize, sugar and rapeseed especially. Some analysts think that is the real motive behind the Chinese authorities announcing planned tight quality controls on foreign matter in incoming cargoes. Canadian exporters fear this may curb sales to their largest customer. But the move might, if it fully transpires, take some of the strain off tight supplies as China imports around 4M tonnes of rapeseed each year – around a third of total world exports.

Sunflower oil contributions boosted

Sunflower oil supplies look likely to improve from latter 2016 onward if currently planned larger crops in Europe, CIS countries and Argentina get normal weather. Ukraine’s crop is expected to show the biggest rise, using land vacated by failed winter wheat crops. Along with Russia and Kazakhstan, this could produce a 22M tonne CIS crop – over 1M tonnes more than last year’s. Slightly larger European sowings and a return to more normal yields are expected to boost this region’s contribution from 7.6M to 8.4M tonnes, while Argentina’s crop is seen rising 300,000 tonnes to 2.8M tonnes.

The USDA’s first look at 2016/17 sunflower oil supply sees output rising from 15.1M tonnes to 15.8M tonnes, exports from 7.56M tonnes to 8.05M tonnes and world consumption up from 14.8M tonnes to 15.5M tonnes. Even so, world carryover stocks of sunflower seed are seen dropping to a multi-year low of 1.3M tonnes at the close of 2016/17, leaving no margin for crop problems next year.

Prices of both oils have risen in recent months as supplies from last year’s smaller EU crops wind down. However, overall, vegetable oil prices might be considered quite cheap in both nominal and inflation weighted terms, with most items recently trading near the bottom of their 10-year range. �John Buckley is OFI’s market corrrespondent

�

FIGURE 2: MALAYSIAN PALM OIL FUTURES (US$ EQUIVALENT)

FIGURE 3: CHINA HOLDS THE LION’S SHARE OF WORLD RAPESEED OIL STOCKS (M TONNES)

John Buckley June.indd 2 14/06/2016 11:34

Overcoming challengesWith edible oil imports now accounting for nearly 60% of India’s consumption requirements, the country needs to look at raising its oilseed productivity, expanding its oil palm area and capitalising on factors such as its non-GMO soya status and near monopoly on castor oil production, the recentOFI India 2016 conference heard

INDIA


Promoting productivity, self-sufficiency

“Somewhere along the line, we lost focus on oilseed productivity and the need for self-sufficiency because imported oil was available in abundance,” Dr Jain told the OFI India business conference.

The Technology Mission on Oilseeds and Pulses (TMOP) was launched in 1986 and India was nearly self-sufficient in edible oils in the early 1990s.

Oilseed production in 1986/87 was 11M tonnes and average productivity of major oilseeds was 600kg/ha. This rose to 1,150kg/ha in 2013/14 and production rose to 33M tonnes in the same year.

In 2004, the TMPO was converted into a much scaled-down scheme called the Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM), which was then discontinued and replaced by

India is a country with major global influence and with potential to raise its soyabean productivity, expand oil palm area and add value from castor oil, but faces major challenges to put these into practice, the first

OFI India heard recently.Held on 13-14 April at the Hyderabad International

Convention Centre, the show attracted over 600 attendees and featured a business conference, a Smart Short Course technical programme, an oils and fats exhibition and a pre-show tour of the CSIR-Indian Institute of Chemical Technology (IICT) research facilities.

Alarming level of imports

India is the world’s largest edible oil importer, taking around 15M tonnes/year of edible oil valued at over US$10bn, which is almost two-thirds of the country’s total requirement, according to Dr Davish Jain and D N Pathak, chairman and executive director respectively of the Soybean Processors Association (SOPA).

“The foreign exchange outflow on edible oil imports is next only to crude petroleum and gold,” Dr Jain said. “For a country with 1.25bn people, this situation is alarming because we are now dependent on foreign suppliers to meet our need of an essential food item.”

The import of edible oils had grown a whopping 15% per year from 2011/12 to 2014/15 while oilseed production had only grown from 30M tonnes to 33M tonnes.

Annual imports were likely to reach 25M tonnes by 2025 if current oilseed production did not increase substantially, Dr Jain said.

In terms of soyabean production, India is just a marginal player – accounting for around 3% of global production, with the lowest productivity at only a third of the world average.

Around 90% of soya is grown in three states – Madhya Pradesh, Maharashtra and Rajasthan – and 2015 production fell to only 7.4M tonnes due to an erratic monsoon.

Local soya meal demand is only about 4.5M

tonnes, which means the country must export at least 2.5M tonnes/year of soya meal.

And yet India only exported 350,000 tonnes of soya meal in 2015-16 “mainly because we cannot compete on price, even with our non-GM USP”, Dr Jain said. India does not grow GM soyabeans.

The country was therefore caught in a vicious circle with no easy answers. “At the current price of soyabeans in India, our soya meal would cost between US$500-550/tonne,” Dr Jain said. “Argentina, Brazil and US soya meal costs only US$325-350/tonne. This means we cannot export, even using the small premium for being non-GMO.

“If we were to pay a lower price to the farmer, he will not grow soyabeans. If we offer more, we can’t export, and if we can’t export, we can’t buy from the farmers,” he said. �

Indian Oil Palm Cul#va#on Map Indian Oil Palm Cul#va#on Map

FIGURE 1: SOYA AND MUSTARD GROWING AREAS (HIGHLY MONSOON SENSITIVE)

FIGURE 2: INDIA OIL PALM GROWING AREA AND DOMESTIC CPO PRODUCTION

Oil Year (Nov-Oct) Tonnes

2009-10 60,0002010-11 110,0002011-12 138,0002012-13 171,0002013-14 180,0002014-15 200,0002015-16 220,000*2016-17 270,000*2017-18 295,000*2018-19 330,000*2019-20 370,000*

Source: Sushil Goenka, 3F Industries, OFI India 2016

Source: Sumit Gupta, McDonald Pelz Global Commodities, OFI India 2016

India.indd 1 14/06/2016 11:34

INDIA

the National Mission on Oilseeds and Oil Palm (NMOOP), during the 12th plan period 2012-2017.

Dr Jain suggested that an oilseed development fund should be set up to achieve self-sufficiency in edible oils by 2030. Funding could come from a tax of Rs3/kg on imports of oil for the next five years, resulting in a development fund of about Rs4,500 crores/year (US$674M).

The aim would be to bring average oilseed productivity up to two tonnes/ha for soya, mustard and groundnut, and increase the area under oil palm plantation to at least 2M ha, which would provide an additional 8-10M tonnes of palm oil. Other aims would be to:� Shift some areas from high water-consuming

and soil nutrient-depleting crops such as sugarcane, wheat and rice to oilseeds and pulses.

� Significantly improve irrigation facilities in major oilseed growing areas.

� Upgrade the oilseed processing industry to an international level.

� Take up value addition in oilseed processing to give better returns to the crushing industry.

D N Pathak said the major reasons for low soya productivity in India, other than weather and small farm sizes, were the non-availability of quality inputs at the right time and right price; poor adoption of technology; and lack of coordination between various agencies.

India’s current average soya productivity was around 1,000kg/ha, which could be raised to 2,000kg/ha in the next seven to 10 years.

“In fact, adoption of improved technology alone can result in 50% increase in yields” including use of certified seeds, replacement of seed every three years; proper soil nutrient management; farm mechanisation; and efficient water management


through micro-irrigation.At least 1M ha more could be added to soya

cultivation in Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Andhra Pradesh and Karnataka. Additional soya hectarage could also be added in the North East and Bihar, Pathak said.

Dr Suresh Motwani, programme head of sustainable soya at Solidaridad South and Southeast Asia, said that about 100,000ha of soya was produced sustainably in India, out of the 10-12M ha grown by 6-7M producers.

Indian soyabean production was non-GM, family-owned and smallholders (holding under 2ha) cultivated about 95% of the soya crop. Average productivity of the Indian soya crop was 1.18 tonnes/ha against a potential 3-3.5 tonnes/ha.

Dr Motwani echoed Mr Pathak’s view that the reason for such low productivity was lack of knowledge of good practices, old seeds, lack of organisation of farmers; poor market connection

and the high cost of cultivation. Soyabean oil was consumed locally while 50% of

the country’s meal was exported, mainly to Asia, and 0.4M tonnes to Europe. A large amount of soya lecithin was also exported.

Cultivating oil palm

Sushil Goenka, director of India’s 3F Industries, spoke on how only 0.2M ha of the total 1.93M ha potential area identified for oil palm cultivation in India had been planted.

Domestic crude palm oil (CPO) production had grown from 60,000 tonnes in 2009/10 to 200,000 tonnes in 2014/15 and 220,000 tonnes in 2015/16. It was forecast to rise to 370,000 tonnes in 2019-20 (see Figure 2, previous page).

India’s total vegetable oil consumption stood at 21.8M tonnes in 2014/15, against domestic availability of 7.19M tonnes and imported oil consumption of 14.61M tonnes (see Table 1, above).

“In last five years, palm oil accounted for 65% of imported oil consumption.” (see Table 2, above)

Consumption would grow at some 5%/year over the next five years from 22.89M tonnes in 2015/16 to 27.83M tonnes in 2019/20.

Despite government subsidies for seedlings, cultivation and intercropping, price realisation and the long gestation period of oil palms (three to four years before fruit production) was preventing the take-up of the crop as “farmers only grow what is renumerative”.

Consumption patterns

Aravind Chander, head of business development at Giract Consultancies India, said average per capita consumption of edible oils in India was 15kg/year, although it was 20kg in urban areas and 8kg in

�

TABLE 3: OILSEED PRODUCTION & INDIAN DEDEPENDENCE ON OIL IMPORTS

Oil year Oilseedproduction

Dependenceon oil imports

2005-06 27.9M tonnes 32.97%

2006-07 24.2M tonnes 38.46%

2007-08 29.7M tonnes 38.57%

2008-09 24.8M tonnes 47.00%

2009-10 27.7M tonnes 48.44%

2010-11 32.4M tonnes 42.54%

2011-12 29.7M tonnes 52.61%

2012-13 30.9M tonnes 53.50%

2013-14 32.7M tonnes 52.13%

2014-15 27.5M tonnes 57.90%

2015-16 26.3M tonnes*

* 2nd Advance Estimates of Ministry of Agriculture

Source: D N Pathak, OFI India 2016. Oilseeds production – Ministry of Agriculture as of 13 May 2015

INDIA AT A GLANCEEdible oil imports ≈ 15M tonnes/year (US$10bn) (palm 65%; soft oils – soya, sun, rape 35%)

Oilseed production ≈ 33M tonnes

Edible oil production ≈ 7M tonnes (CPO – 220,000 tonnes)

Edible oil consumption ≈ 22M tonnes

Population ≈ 1.25bn

Per capita consumption ≈ 15kg/year

Oil year (Nov-Oct)

Total vegetable oil consumed

Domesticoil availability

Imported oil consumption

2009-10 17.01 7.77 9.24

2010-11 17.18 8.52 8.66

2011-12 18.34 8.15 10.19

2012-13 18.71 8.03 10.68

2013-14 20.20 8.38 11.82

2014-15 21.80 7.19 14.61

TABLE 1: VEGETABLE OIL CONSUMPTION – 2010-2015 (MILLION TONNES)


PALM OILOil year(Nov-Oct)

PALM OIL SOFT OILS Total

Quantity % Soyabeanoil

Sunfloweroil

Rapeseedoil

%

2010-11 6.55 78% 1.01 0.81 0.01 22% 8.37

2011-12 7.67 77% 1.08 1.14 0.10 23% 9.98

2012-13 8.29 80% 1.09 0.97 0.03 20% 10.38

2013-14 7.96 68% 1.95 1.51 0.20 32% 11.62

2014-15 9.53 65% 3.18 1.54 0.36 35% 14.61

SOFT OILS PALM OIL


TABLE 2: CATEGORY-WISE IMPORTED OIL CONSUMPTION – 2010-2015 (MILLION TONNES)

India.indd 2 14/06/2016 11:34


INDIA

rural areas. Oil consumption was expected to grow at 7.2% CAGR from 2015-2020 to reach a per capita rate of 20kg/year in 2025.

“But while the rich get 2,518kcal/day, the poor only receive only 1,679kcal/day against the government’s designated 2,400kcal/day.”

Key market leaders were Adani Wilmar, Bunge, Cargill and Ruchi, which account for more than 35% of the total edible oils and fats market.

Palm oil dominates and, with soyabean and canola, account for more than 50% of total edible oil supply, with the bulk of oils (51%) going into the retail segment (see Figure 3, right).

Key demand sectors were retail, food service and packaged foods.

“The food service sector is the fastest growing sector due to growing disposable incomes, changes in home cooking habits and access to fast food chains.

“This is followed by other food segments which include Ready to Eat (RTE), Ready to Cook (RTC) and street foods as they are mainly driven by cheaper oil supply (palm oil) and higher disposable incomes.

“The packaged food market in India is likely to witness double digit growth rates in the next four to five years.”

In India, oils are sold in different formats, with 40% of oils sold in loose/unbranded formats. Different sectors used different feedstocks (see Figure 4, right).

Bulk oils dominated the market, with semi-speciality and speciality oils making up the rest:

Bulk oils (66%):� Major staple liquid oils refined from a single raw

material (excluding olive, avocado, sesame and exotic oils) supplied in bulk or packaged.

� Simple frying blends (two oils) sold in bulk without packaging and based on specifications.

� Palm olein.

Semi-speciality oils (19%) � Palm oil fractions (excluding olein).� Packed fats – sophisticated or customised frying

blends (including HORO/olein).� Speciality fats (includes enzymatic

interesterified/hydrogenated).

Speciality oils (15%) � Cocoa butter equivalent (CBE) and components

(shea, illipe, mango fats).� Infant formula oils, added value fats (such as

Omega 3), olive oil, enriched oils, virgin oils.� Low SAFA hardstocks.

Oil consumption trends across Indian states varied.

In the north: � Uttar Pradesh, Delhi and Punjab consume a

considerate amount of deep fried food such as poori, samosa and pakoras.

� Gujarat, Bihar and Rajasthan use considerable amounts of oil for deep frying purposes than for generic cooking purposes.

� West Bengal, Assam and Arunachal Pradesh seem to consume a lot of fish, which is part of their staple diet. They eat baked fish or cooked fish that contain lesser amounts of oil.

In the south:� Tamil Nadu and Andhra Pradesh use oil for

generic purposes other than deep frying as most of their food, such as rice, vegetables, idli and dosa do not require deep frying.

� The use of coconut oil is highly specific to southern states such as Kerala, which uses coconut for cooking and frying purposes.

� Karnataka, Kerala, Andhra Pradesh, Maharasthra and Goa consume a significant amount of fish that is deep fried.

Lost opportunity with castor oil

G Chandrashekhar, economic advisor to the Indian Merchants Chamber, focused on how India is the world’s largest producer, processor and exporter of castor oil, accounting for over 80% of the global market.

“Does India obtain a monopoly price from world market? Sadly, no.

“Do all stakeholders in the castor value chain enjoy equitable benefits? No, again.”

He said castor output seed data was unreliable.

In 2015/16, farmers grew about 1.73M tonnes of castor seed, according to government figures, or 1.4M tonnes according to trade figures.

“Growers are short-changed and Indian exporters play into the hands of a few international trading houses”, with heavy speculation and volatility in the market.

India exported 431,000 tonnes of castor oil in 2012/13 and was expected to export 465,000 tonnes in 2015/16 but exporters were “throwing away this precious raw material at ridiculously low prices”.

Mr Chandrashekhar said a comprehensive review of trade policy was needed so that benefits could flow equitably among growers, processors and exporters. �

OFI will be returning to India next year. For the date and venue of OFI India 2017, go to www.ofievents.com/india

Source: Aravind Chandar, Giract Consultancies India, OFI India 2016© Giract 2016 www.giract.com

Demand Sector Sub Sectors Penetration of Oils

BakeryArtisanal

Mainly Palm Oil (>70%) followed by Tallow/Lard and Sunflower OilIndustrial

Food Processing

Snacks Mainly Palm oil (>50%), Butter,Sunflower and Soybean.

Confectionary(Choc) Palm oil (>50%), Cotton seed Oiland Rapeseed oil, Butter and

Tallow.Other Foods (RTE, RTC) All oils

Food ServiceFood Service (Commercial)

Palm (about 50%), Sunflower and Rapeseed OilFood Service (Contract)

Retail Retail (Oil in produced form) Palm (about 30%), Sunflower and Soybean Oil, Rice bran, Peanut.

Consumption of Oil Types across Demand SectorsFIGURE 4: CONSUMPTION OF OIL TYPES ACROSS DEMAND SECTORS

© Giract 2016 www.giract.com

Palm Oil dominates and with Soybean and Canola together accounts >50% of total edible oil supply. Bulk of the oils goes into the retail segment.

32%

12%

6%10%

5%2%

4%

19%

9%1%

Supply Sector (2015)

Palm Oil Soybean OilSunflower Oil Rapeseed/CanolaCottonseed Oil Rice bran oilPeanut/Groundnut ButterTallow/Lard Others (Coconut)

The organized sector comprising of leaders including Ruchi, Adani Wilmar & Bunge account to >35% of the total edible oils & fats

7%

23%

19%

51%

Demand Sector (2015)

Bakery Food Processing Food Service Retail

Source: Aravind Chandar, Giract Consultancies India, OFI India 2016

FIGURE 3: BREAKDOWN OF OILS IN SUPPLY SECTOR & BREAKDOWN OF DEMAND SECTORS

India.indd 3 14/06/2016 11:34

Desmet Ballestra, proud sponsor of the 2016 OFI Plant & Equipment Guide.


87x265Annonce -OFI-2016v001.indd 1 5/2/16 1:29 PM

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OTHER

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OIL DISTILLATION/FRACTIONATION

ALKALI & PHYSICAL REFINING

INTERESTERIFICATION

MISCELLA REFINING

DEODORISERS

BLEACHERS

OIL DRYERS

FAT SPLITTING

FATTY ACID DISTIL’N/FRACT’N

OTHER

HYDROGEN GENERATORS

HYDROGEN SYSTEMS

OTHER

COOKING/SALAD OILS

BUTTER FORMULATION

SHORTENING/MARGARINE PROD’N

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LECITHIN PRODUCTION

SULPHONATION

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DETERGENT PRODUCTION

SOAP PRODUCTION

SOAP FINISHING

COSMETICS PRODUCTION

GLYCERINE REFINING

FATTY ACID DERIVATIVES

PHARMACEUTICALS

BIODIESEL/METHYL ESTER

OTHER

PNEUMATIC CONVEYORS

BELT CONVEYORS

VIBRATORY CONVEYORS

SLATTED CONVEYORS

ELEVATORS

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OTHER

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GRAVITY SEPARATORS

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MEMBRANE SEPARATORS

FILTER PRESSES

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OTHER

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PROCESS HEATING SYSTEMS

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HEAT RECOVERY SYSTEM

OTHER


SOLVENT EXTRACTION



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Plant & technology chart 2016: Summary table of company activities


SOLVENT EXTRACTION



PELLETING MILLS

OTHER

DEGUMMING

WINTERISING

CRYSTALLISATION



INTERESTERIFICATION

MISCELLA REFINING

DEODORISERS

BLEACHERS

OIL DRYERS

FAT SPLITTING


OTHER

HYDROGEN GENERATORS

HYDROGEN SYSTEMS

OTHER

COOKING/SALAD OILS

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LECITHIN PRODUCTION

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SOAP FINISHING


GLYCERINE REFINING


PHARMACEUTICALS


OTHER

PNEUMATIC CONVEYORS

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SLATTED CONVEYORS

ELEVATORS

LOADING ARMS/CHUTES

AUGER FEEDERS

STORAGE SILOS

STORAGE TANKS

OTHER

SCREENS


GRAVITY SEPARATORS

MAGNETIC SEPARATORS

MEMBRANE SEPARATORS

FILTER PRESSES


OTHER

PACKING EQUIPMENT

INSTRUMENTATION




STEAM BOILER

THERMAL OIL HEATER


OTHER


SOLVENT EXTRACTION



PELLETING MILLS

OTHER

DEGUMMING

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MISCELLA REFINING

DEODORISERS

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OIL DRYERS

FAT SPLITTING


OTHER

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HYDROGEN SYSTEMS

OTHER

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PHARMACEUTICALS


OTHER

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ELEVATORS

LOADING ARMS/CHUTES

AUGER FEEDERS

STORAGE SILOS

STORAGE TANKS

OTHER

SCREENS


GRAVITY SEPARATORS

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OTHER

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Leading Oils & Fats technologies

PREPARATIONCleaning • Cracking • DehullingConditioning • Flaking • Expanding

PRESSINGFull Pressing • Prepressing

EXTRACTIONExtractors • Desolventing ToastingDistillation • Solvent Recovery

REFININGDegumming • Neutralising • BleachingWinterising • Deodorising

FAT MODIFICATIONFractionation • Hydrogenation • Interesterification

OLEOCHEMICALSMethylesters • Glycerine • BiodieselFatty Acids • Fatty Alcohols

v2-87x265General-OFI-2015.indd 1 4/30/15 10:34 AM

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P&E Chart 2016 new.indd 2 09/06/2016 12:17

Plant & technology listing 2016Oils & Fats International’s updated global selection of plant and equipment suppliers to the oils and fats industry, accompanied by a chart of company activities

ArgentinaPROCESS S.R.L. (PROGLOBAL)Av. Juan Pablo II 6750, S2010AMP - RosarioSanta FeTel: +54 341 454 4544E-mail: [email protected]: www.proglobal.com

AustriaBDI – BioEnergy International AGParkring 18, Raaba-Grambach, Styria 8074Tel: +43 316 4009 100E-mail: [email protected]: www.bdi-bioenergy.com

BelgiumDesmet Ballestra Group Oils, Fats & OleochemicalsDivision Belgicastraat 3 - B-1930 ZaventemTel: +32 2 716 11 11Fax: +32 2 716 11 09E-mail: [email protected] Website: www.desmetballestra.comContact: Mr Olivier Hanne

De Smet S.A. Engineers & ContractorsWaterloo Office Park - Building O - Box 32 Drève Richelle 161, Waterloo 1410Tel: +32 2 634 2500 ; Fax: +32 2 634 2525E-mail: [email protected]: www.dsengineers.comOther: EPC/EPCM contractor

VYNCKE N.V.Gentsesteenweg 224, Harelbeke 8530Tel: +32 56 730 630E-mail: [email protected]: www.vyncke.comOther: Biomass energy plants

ChinaGuangzhou Tiptop Imp & Exp Co. LtdNo. 2209, No.111-115 Siyouxin RoadYuexiu District, Guangzhou, Guang Dong51060Tel: +86 20 8739 2794E-mail: [email protected]: www.tiptopchem.comOther: Chemicals, inorganic powder fillers



Jiangsu Muyang Group Co. Ltd.No.1 Muyang Road, Hanjiang Yangzhou, Jiangsu 225127Tel: +86 1395 1056 892E-mail: [email protected]: www.muyang.comOther: Pre-treatment, extraction, refining

*Myande GroupNo. 199, South Ji’an RoadYangzhou City (225127)Jiangsu ProvinceTel: +86 514 8784 9000Fax: +86 514 8784 8883E-mail: [email protected], [email protected]: www.myande.comContact: Li Xudong

Scikoon Industry Co LtdBuilding C, Runcheng Industry Zone, No.68, Huagang Avenue, Huadu District, GuangzhouGuangdong 510800Tel: +86 20 3938 8895Fax: +86 20 3686 2630E-mail: [email protected]@scikoon.comWebsite: www.scikoon.com

Costa RicaShutek Oleo S.A.52 Condominio InteramericanaCalle Cordero, San Pablo, HeredTel: +506 8309 1555E-mail: [email protected]: www.shutek.comContact: Hari Krishna Shukla

DenmarkAlfa Laval Copenhagen A/SMaskinvej 5, Soborg DK-2860Tel: +45 3953 6000E-mail: [email protected]: www.alfalaval.comContact: Bent SarupOther: Lecithin drying, soap stock splitting, hydrogeneration, biodiesel plant, heat exchangers

Gerstenberg Services A/SVibeholmsvej 21, PO Box 196 BrøndbyCopenhagen 2605Tel: +45 4343 2026 ; Fax: +45 4343 2028E-mail: [email protected] Website: www.gerstenbergs.com

EgyptMina Oil19 Abd El Aziz Ismael str.Triumph SquareCairo 11361HeliopoliTel: +20 22 7752 746Fax: +20 22 2775 3506E-mail: [email protected]: www.minagroup.com.eg

GermanyB+B Engineering GmbHOtto-von-Guericke-Str. 50Magdeburg D-39104Tel: +49 391 505 499 50Fax: +49 391 505 499 59E-mail: [email protected]: www. b-b-engineering.de

Buss-SMS-Canzler GmbHKaiserstrasse 13-15Butzbach 35510Tel: +49 6033 85 0Fax: +49 6033 85 249E-mail: [email protected]: www.sms-vt.comOther: Distilled monoglyceride production, thin film evaporator, short path distillation, molecular distillation, vapour permeation

Clariant Produkte (Deutschland) GmbHRossertstr. 78Frankfurt 645926 Tel: +49 1726 151 707E-mail: [email protected]: www.clariant.comContact: Hendrik Ahrens

CPM SKET GmbHSchilfbreite 2, Magdeburg 39120Tel: +49 3916 82249Fax: +49 3916 84233E-mail: [email protected]: www.cpm-sket.de

FLUID Misch und Dispergiertechnik GmbHIm Entenbad 8Lörrach 79541Tel: +49 7621 5809 0Fax: +49 7621 5809 16E-mail: [email protected]: www.ekato.comOther: Agitators

GEA Aktiengesellschaft, Product Group SeparationWerner-Habig-Straße 1 Oelde 59302Tel: +49 2522 77 0E-mail: [email protected]: www.gea.com

P&E listing 2016 v3.indd 1 14/06/2016 11:27



*GEA Wiegand GmbHAm Hardtwald 1, Ettlingen 76275Tel: +49 7243 7050Fax: +49 7243 705 330E-mail: [email protected]: www.gea.comOther: Evaporators

GekaKonusSiemensstrasse 10, Eggenstein - Leopoldshafen, Baden - Württemberg 76344Tel: +49 721 943 740Fax: +49 721 943 7444E-mail: [email protected]: www.gekakonus.net

*HF Press+LipidTechSeevestrasse 1,Hamburg, 21079Tel: +49 40 771 79 488E-mail: [email protected]: www.hf-group.com

**Koerting Hannover AGBadenstedter Str. 56Hannover 30453Tel: +49 511 2129 0Fax: +49 511 2129 223E-mail: [email protected]: www.koerting.de

*Maschinenfabrik Reinartz GmbH & Co. KGIndustriestraße 14, Neuss, 41460Tel: +49 213 197 6124Fax: +49 213 197 6112E-mail: [email protected]: www.reinartz.deOther: Screw presses

MICRODYN-NADIR GmbHKasteler Strasse 45Wiesbaden 65203Tel: +49 611 962 6001Fax: +49 611 962 9237E-mail: [email protected]: www.microdyn-nadir.deOther: Membrane filters

Siemens AGLina-Ammon-Str. 3, 90471,NurembergTel: +49 911 895 4123Fax: +49 9119 1127 87E-mail: [email protected]: www.siemens.com

SIWACO GmbHHuettenweg 5Netphen 57250Tel: +49 2737 21606 0Fax: +49 2737 21606 511E-mail: [email protected]: www.siwaco.comOther: Cracker and flaker rolls

VetterTec GmbHLeipziger Strasse 104-108Kassel 34123Tel: +49 561 5001 90Fax: +49 561 5001 940E-mail: [email protected]: www.vettertec.deOther: Dissolventising, animal feed, soya meal �

IndiaAnchrom Enterprises I P Ltd101-104 Shri Aniket, Navghar Road Mulund, East MumbaiTel: +91 22 2163 9928Fax: +91 22 2163 9927E-mail: [email protected]: www.anchrom.inOther: Chromatographic analysis of fixed oils

AscentS.No-2, 1st Floor Nalanda Shopping Center Station Road, Goregaon (W), Mumbai Maharashtra 400062Tel: +91 2228 765 887Fax: +91 6691 0293E-mail: [email protected]: www.ascentmachineries.com

Bombay Test House Pvt LtdUnit No: 1, 4th Floor, Banking Complex-II, Plot No. 9 & 10, Sector 19-AOpp. APMC Market -2, VashiNavi Mumbai, Maharashtra 400703 Tel: +91 224 1239 185Fax: +91 222 7831 911E-mail: [email protected]: www.bombaytesthouse.comOther: Technical testing, quality control and analysis

BUCHI India Pvt Ltd201, Magnum Opus Shantinagar Ind. Estate Vakola, Santacruz, MumbaiMaharashtra 400074Tel: + 91 2266 7754 00Fax:+ 91 22 66 71 89 86E-mail: [email protected]: www.buchi.com

Chempro Technovation PVT Ltd802 Astron Tech Park Satellite Road Ahmedabad, Gujarat 380015Tel: +91 982 500 5649E-mail: [email protected]: www.chempro.inOther: Dry fractionation, hydrogenation autoclaves

D. P. EngineersA-12, LGF, Pandav Nager Complex, Ganesh Nager, Near Aggarwal Sweet, Delhi 110092Tel: +91 1122 08 3434E-mail: [email protected]: www.dpengineer.co.in

Fenix Process Technologies Pvt LtdK 6/1, Malini, Erandwane Co-op Housing Society, Erandwane, Pune - 411004Tel: +91 20 6650 8772, 6500 8773Fax: +91 20 2545 8454E-mail: [email protected] ; Website: www.fenix.inContact: M.V RaoOther: Evaporation, used oil re-refining, static mixers, methanol recovery, glycerine purification

Filteration Engineers India Pvt. LtdPlot No. W 62B, TTC Industrial Area MIDC Rabale, Navi Mumbai, Maharashtra 400701Tel: +91 22 2760 8501Fax: +91 22 2760 8510

E-mail: [email protected]: www.feipl.com

Flosys Pumps PVT LtdNo.90 SIDCO Industrial Estate Malumichampatti Post CoimbatoreTamil Nadu 641050Tel: +91 422 2655 030Fax: +91 422 2655 230E-mail: [email protected]: www.flosys.in

Fortune Natural Resources402 Lenyadri Tower, Plot No 49 -2 Sector 19-A Nerul East, Navi, MumbaiMaharashtra 400 706Tel: +91 22 2772 5497Fax: +91 22 2772 4909E-mail: [email protected]: www.fortunenatural.comContact: Pawan Kumar Poddar

HRS Process Systems Ltd201/202, Karan Selene, 851, Bhandarkar Institute Road, PuneMaharashtra 411004Tel: +91 20 2566 3581Fax: +91 20 2566 3583E-mail: [email protected]: www.hrsasia.co.in

Kevin Enterprises Pvt LtdPlot No.11, Street No.10, MIDC, Andheri (E)Mumbai, Maharashtra 400093Tel: +91 2261 4780 00Fax: +91 2261 4780 01E-mail: [email protected]: www.kevincpp.comOther: Structured packing, random packing, tower internals, mist eliminators, tower trays

*Kumar Metal Industries Private Ltd101 Kakad Bhavan 30th Road, Bandra (West), Mumbai 400050Tel: +91 22 26441673, 2845820028458300E-mail: [email protected]: www.kumarmetal.comContact: Rishabh S Maniktala

MAZDA LimitedMazda House, 650/1,Panchvati Second Lane Ambawadi Ahmedabad, Gujarat 380006Tel: + 91 79 4000 7000Fax: + 91 2656 5605E-mail: [email protected]: www.mazdalimited.com

Mectech Process Engineers Pvt. Ltd.366 Phase 2, Udyog Vihar GurgaonGurgaon 122016Tel: + 91 124 470 0800Fax: + 91 124 470 0801E-mail: [email protected]: www. mectech.co.in

Mold-Tek GroupPlot Number 700, Road Number 36 Jubilee Hills, Telangana, HyderabadTel: +91 40 40 300 300 ; Fax: +91 40 300328E-mail: [email protected]: www.moldtekgroup.com

P&E listing 2016 v3.indd 2 14/06/2016 11:27



Muez-Hest India Private Limited230 & 231, Blue Rose Industrial EstateW. E. Highway, Borivali (East)Mumbai, Maharashtra 400 066 Tel: +91 22 2870 1752Fax: +91 22 2854 1758E-mail: [email protected]: www.muezhest.comOther: Meal desolventisation, condensate recovery management system

Neo ConveyorsG-414,UPSIDC PHASE-II,M.G Road Industrials Area Ghaziabad, Uttar Pradesh 201015Tel: +91 965 411 2235E-mail: [email protected]: www.neoconveyors.comOther: Conveyors

Oilex Engineers India Pvt Ltd101 Akshaya Plaza, Road No 1, Chembur Mumbai, Maharashtra 400077Tel: +91 22 2528 1265Fax: +91 22 2528 7909E-mail: [email protected]: www.oilexindia.com

Rostfrei Steels Pvt Ltd211, 2nd Floor, Okhla Phase 3New Delhi 110020 Tel: + 91 9810 1381 69E-mail: [email protected]: www.rostfreisteels.comOther: Solvent plants

Sharplex Filters (India) Pvt LtdR-664, T.T.C Industrial Area M.I.D.C. Rabale, Maharashtra, Navi MumbaiTel: +91 22 6940 9850Fax: +91 22 2769 6325E-mail: [email protected]: www.sharplex.comContact: Satish Khadke

Shree Nandinee Fibre Glass Engineers Pvt Ltd81/17 & 81/16 GIDC Industrial Estate Makarpura Nr. Guajarat Aluminium Pvt Ltd Vadsar Main Road, Vadodara, Gujarat 390010Tel: +91 265 6444 528Fax: +91 265 2656 104E-mail: [email protected]: www.shreenandineefibreglass.comOther: Non metallic (pp, frp, hdpe, pvdf, pvc) piping, tanks, vessels, agitator, scrubbing systems

Surendra Kumar & Co. Pvt. Ltd.#B-10, 1ST Floor, 219-COld China Bazar Street, Kolkata, WB 700001Tel: +91 9339 2335 33Fax: +91 3340 6850 10E-mail: [email protected]: www.skcpl.in

Suresh Engineering WorksShukla Industrial Shed, Mahadeoseth Compound, Mahim Road, behind Briwasi HotelPalghar, Maharashtra 401404Tel: +91 2525 254793Fax: +91 2525 254793E-mail: [email protected]: www.sureshengineering.com

Contact: Suresh KewatOther: Driers, drum flakers etc

Tintometer India Pvt LtdB-91, APIE, Sanathnagar, Hyderabad, Telangana 500018Tel: +91 9322 4434 33E-mail: [email protected]: www.lovibondcolour.comOther: Tintometer, color matching equipment

United Oil Mill Machinery and Spares Pvt LtdD-58, 2nd Floor, Okhla Industrial Area Phase 1 New Delhi, Delhi 110020Tel: + 91 11 2637 1201Fax: + 91 11 2637 1200E-mail: [email protected]: www.umas-india.com

Veendeep Oiltek Exports Pvt LtdN-16/17/18, Additional Midc, Patalganga Dist. Raigad 410207 Tel: +91 291 2250 532Fax: +91 291 2250 534E-mail: [email protected]: www.veendeep.com

ItalyAndreotti Impianti S.p.A.Via Di Le Prata, 148, 50041 Calenzano (FI)Tel: +39 055 44870 ; Fax: +39 055 44917 35E-mail: [email protected]: www.andreottiimpianti.com

*C.M. Bernardini International S.p.A.Via Appia Km. 55,900 04012 Cisterna Di Latina (LT)Tel: +39 06 9687 1028Fax: +39 06 9294 2564E-mail: [email protected]: www.cmbernardini.itOther: Meal processing, glycerine treatment refining, biodiesel distillation, fractionation & esterification

Desmet Ballestra S.p.a Detergents, Surfactants & Chemicals Division Via Piero Portaluppi 17 20138 MilanoTel: +39 02 50831Fax: +39 02 5801 8449 E-mail: [email protected] Website: www.desmetballestra.comContact: Mr Corrado Mazzanti

Servizi Industriali s.r.l.Marie Curie n. 19, Ozzano dell’EmiliaBologna, Emilia Romagna 40064Tel: +39 051 795 080Fax: +39 051 799 337E-mail: [email protected]: www.macfuge.comOther: Dynamic centrifugal mixer

Technoilogy CMB ItalyVia Federici N. 12 Via Tommaso Marinetti 221 00143, RomeTel & Fax: +39 06 9696 181E-mail: [email protected]: www.technoilogy.itContact: Andrea Bernardini

JordanMawlawi GroupPO Box: 426074, Yarmook Amman 11140Tel: +62 795954142E-mail: [email protected]: www.mawlawigroup.comOther: Distributor oil and raw materials

LuxembourgMitchells Europe11 rue des Trois CantonsWindhof Koerich L-8399Tel: +324 7694 4491E-mail: [email protected]: www.mitchells-europe.euOther: Chain conveyors, screw conveyors, vapour tight conveyors

MalaysiaExcelVite Sdn. BhdLot 56442, 7.5 MileJalan Ipoh/ChemorChemor Perak 31200Tel: +605 2014 192E-mail: [email protected]: www.excelvite.com

Felda IFFCO Sdn BhdLot 596, Lebuh Raja LumuPandamaran Industrial EstatePort KlangSelangor Darul Ehsan 42009 Tel: +603 3165 3313Fax: +603 3167 1980E-mail: [email protected]: www.feldaiffco.comContact: SL Yap

INTEC Energy Systems Sdn BhdNo. 6F-21, IOI Business ParkBandar Puchong JayaPuchong Selangor 47170Tel: +603 5891 6642Fax: +603 5879 9824E-mail: [email protected]: www.intec-energy.de

JCT Packaging SolutionNo. 5429-A, Jalan Kenari 18Bandar PutraKulai, Johor 81000Tel: +601 6722 1217E-mail: [email protected]: www.amcor.comOther: Plastic packaging materials

JJ-Lurgi Engineering Sdn Bhd 16, Jalan 51A/225Petaling JayaSelangor 46100 Tel: +603 7861 6188E-mail: [email protected]: www.jj-lurgi.comContact: Anthony Kai Yuin Chang

�

P&E listing 2016 v3.indd 3 14/06/2016 11:27


23 OFI – www.oilsandfatsinternational.com

OILTEK SDN BHDLot 6, Jalan Pasaran 23/5, Kawasan Miel, Phase 10, Shah Alam Selangor 40300Tel: +603 5542 8288 ; Fax: +603 5541 8288E-mail: [email protected] ; Website: www.oiltek.com.myContact: Khai Weng Yong

NetherlandsCPM Europe B.V.Rijder 2, Zaandam 1507 DNTel: +31 75 65 12 611 ; Fax: +31 75 65 12 600E-mail: [email protected] ; Website: www.cpmeurope.nlContact: Arthur vom Hofe ; Other: Flaking, cracking, preparation

Dinnissen Process TechnologyHorsterweg 66, Sevenum 5975 NBTel: +31 77 467 3555 ; Fax: +31 77 467 3785E-mail: [email protected] ; Website: www.dinnissen.nl

MAHLE Industrial Filtration (Benelux) B.V.PO Box 35, Lochem 7240AATel: +31 57 329 77 77E-mail: [email protected] ; Website: www.mahle-industry.comOther: Filtration systems, fine filtration, solid– liquid filtration

NorwayNEL HydrogenHeddalsvegen 11, Notodden 3671Tel: +47 3509 3838E-mail: [email protected] ; Website: www.nel-hydrogen.com

PakistanControl Technology201/S, Block-2, 2nd Floor, P. E .C.H.S. Karachi - 75400 - Pakistan, Sindh KarachiTel: +92 2134 3110 73 ; Fax: +92 2134 5479 68E-mail: [email protected]: www.controltechnology.com.pk

Saudi ArabiaAlHaririah Est.Western Bagradiah Chemical Division, Jeddah, AK 21453Tel: +96 650 360 4457E-mail: [email protected] ; Website: www.silkreen.com

SingaporeBeaver Contromatic Pte Ltd30 Shaw Road #02-06, Singapore 367957Tel: +65 9069 7671 ; Fax: +65 6743 1194E-mail: [email protected]: www.beavercontro.comOther: Supplier of ball and butterfly valves, illumination and observation equipment, in-line filters, valves for critical processes

Boerger Pumps Asia PTE Ltd16 Boon Lay Way, #01-48 Tradehub 21, Singapore, 609965Tel: +65 629 540 ; Fax: +65 629 542E-mail: [email protected] ; Website: www.boerger.comOther: Pumps, macerators

Engineers & Contractors

Brussels • BelgiumTel.: +32 (0)2 634 25 00Fax: +32 (0)2 634 25 [email protected]

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OFI-pub108x303.indd 1 1/20/16 2:33 PM

�

P&E listing 2016 v3.indd 4 14/06/2016 11:27



*LIPICO Technologies Pte Ltd61 Bukit Batok CrescentUnit 06-03/06 Heng Loong BuildingSingapore 658078Tel: +65 6316 7800Fax: +65 6316 7830E-mail: [email protected]: www.lipico.comOther: Refining: biodiesel, oleochemical

**Lipotech Project Engineering Pte Ltd21, Bukit Batok Crescent #27-75 WCEGA Tower Singapore 658065Tel: +65 6515 0027Fax: +65 6515 0037Email: [email protected] Website: www.lipotechprojects.com Contact: Narayandas Sudarshan

Technithon International Pte Ltd24 Sin Ming Lane #06-98 Midview City Singapore 573970Tel: +65 6659 2641E-mail: [email protected]: www.trivedigroupe.com

SwedenPerten InstrumentsPO Box 9006 Hägersten 126 09Tel: +46 8 505 80 900E-mail: [email protected]: www.perten.com

Spain**Fundiciones Balaguer SAPolig Ind los vasalos parc 104Onil, Alicante03430Tel: +34 96556 4850Website: www.balaguer-rolls.com

SepiolsaPol. Ind. Miralcampo Avda. Del Acero 14-16 Azuqueca De Henares Guadalajara 19200Tel: +34 9490 10 000E-mail: [email protected]: www.sepiolsa.com

SwitzerlandBühler AGGupfenstrasse 5Uzwil 9240Tel: +41 71 955 11 11Fax: +41 71 955 33 79E-mail: [email protected]: www.buhlergroup.com

Buss ChemTech AGHohenrainstrasse 12APratteln 4133Tel: +41 61 825 64 62E-mail: [email protected]: www.buss-ct.com

TurkeyENTIL A.S.O.S.B. 15. Cad. No: 2Eskisehir, 26110Tel: +90 222 237 57 46Fax: +90 222 237 26 75E-mail: [email protected]: www.entil.com.trOther: Rolls for oilseed, chocolate, flour and feed industries; cracking, flaking

Keller & Vardarci Industries LTD STICinar Sok. No: 12 Ege Serbest Bolgesi Gaziemir Izmir Izmir, 35410Tel: +90 2324 7848 14E-mail: [email protected]: www.keller-vardarci.com

United Arab EmiratesEcoreLOB 16, Office 313Jebel Ali Free ZoneDubai 18453Tel: +971 4887 3071Fax: +971 4887 3072E-mail: [email protected]: www.ecoremena.com

Metan FZCO2203, Jafza View 18Jebel AliDubai 61389Tel: +971 4889 5647Fax: +971 4889 5657E-mail: [email protected]: http://metan.aeOther: Plant oils solvent extraction

United KingdomChemtech InternationalCrown House1a High StreetTheale RG7 5AHTel: +44 1189 861 222E-mail: [email protected]: www.chemtechinternational.com

Europa Crown LimitedWaterside Business ParkLivingstone RoadHessle East Yorkshire HU13 0EGTel: +44 1482 640099Fax: +44 1482 649194E-mail: [email protected]: www.europacrown.comOther: Soya protein concentrates and speciality extraction

Oxford InstrumentsTubney WoodsAbingdon, OX13 5QXTel: +44 1865 393 200Fax: +44 1865 393 333E-mail: [email protected]: www.oxford-instruments.com

� Unites States of AmericaAnderson International Corp4545 Boyce Parkway, StowOhio 44224Tel: +1 216 641 1112Fax: +1 330 688 0117E-mail: [email protected]: www.andersonintl.netOther: Pet food, animal feed

Crown Iron Works2500 W County Road CRosevilleMinnesota 55113Tel: +1 651 639 8900Fax: +1 651 639 8051E-mail: [email protected]: www.crowniron.com

Dupps CompanyPO Box 95, GermantownOhio 45327Tel: +1 937 855 6555Fax: +1 937 855 6554E-mail: [email protected]: www.dupps.com

French Oil Mill Machinery Company1035 W. Greene StreetPO Box 920, PiquaOhio 45356Tel: +1 937 773 3420Fax: +1 937 773 3424E-mail: [email protected]: www.frenchoil.comOther: Screw presses, lab presses, cooker/conditioner, flaking mill

Oil Dri Corporation of America410 N Michigan Ave, Suite 400Chicago, IL 60611Tel: +1 3123 211 515E-mail: [email protected]: www.pure-flo.comOther: Bleaching clays/earths

PQ Corporation300 Lindenwood Dr, Malvern, PA 19087Tel: +1 610 651 4200E-mail: [email protected]: www.pqcorp.com

Westway Terminals9325 East Avenue S, Houston, TX 77012Tel: +1 713 514 1015Fax: +1 713 924 5032E-mail: [email protected]: www.westwayterminals.com

The above companies are a selection of plant, equipment and technology suppliers to the oils and fats industry who have replied to an Oils & Fats International questionnaire this year. Please refer to ‘Summary Table of Company Activities’ chart for companies’ areas of operation.

* Denotes entries from 2015 questionnaire** Denotes entries from 2014 questionnaire

‘Other’ refers to other activities selected in the accompanying chart

P&E listing 2016 v3.indd 5 14/06/2016 11:27


OFI June p25_taiko_metan&sharplex.indd 25 10/06/2016 13:55

Bleaching earths, used as part of the process that removes impurities from edible oils prior to final application, are a fast growing market that is estimated to be worth US$3.59bn by 2022. Rose Hales writes

BLEACHING EARTHS


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Before vegetable oils can be safely consumed, they have to be processed in order to remove impurities, both for commercial and health purposes. A process known as bleaching involves the

use of bleaching earths or clays. The term itself is misleading as colour removal is not the most important purpose of the bleaching process.

Vegetable oils contain contaminates that adversely affect the performance, appearance and taste of the oil. In order for it to be used in edible applications, the oil must meet high quality standards that require the removal of various impurities.

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Make sure you understand the trends that will affect your business. Don’t let your competitors take the leading edge.

OFI examines the latest important topics affecting every step of the supply chain – such as feedstocks, processing, trading, transport and shipping, technology, biofuels, sustainability, legislation and consumer trends – in its news, market columns and features.

SUSTAINABILITYRTRS: Expense without return?

RENEWABLE RESOURCESThe drive towards bioplastics in cars

Aug/Sep 2012 � Vol 28 No 7www.oilsandfatsinternational.com

Exhibition catalogue inside

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CASTOR OILDeadly opportunity

OLIVE OILMaintaining standards

MIDDLE EASTStaying afloat

March 2014 � Vol 30 No 3www.oilsandfatsinternational.com

Exhibition catalogue

inside

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April/May 2013 � Vol 29 No 4www.oilsandfatsinternational.com

HIGH OLEIC OILFrom niche to speciality

SOUTH AMERICAThe China factor

Brazil addresses infrastructure woes

HIGH OLEIC OILFrom niche to speciality

SOUTH AMERICAThe China factor

Brazil addresses infrastructure woes

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p28.indd 1 13/06/2016 11:58

BLEACHING EARTHS


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The bleaching process essentially removes some colour from the oil; reduces how much chlorophyll and carotinoids the oil contains; removes soap, gums and trace metals; and decomposes oxidation products.

Bleaching is performed prior to other processing steps such as hydrogenation, refining or deodorisation. Suppliers of the clays say that bleaching earth will accounts for 4-10% of overall refining costs, depending on a variety of factors including oil type, dosage, oil contaminent levels, specification and disposal cost.

What are bleaching earths?

Oils are bleached using a powdered, surfactant material. Simply put, the powder is mixed with water, and then added to the oil where they absorb unwanted impurities before they are removed from the oil again, taking the impurities with them.

Bleaching earths are generally composed of up to three types of clay minerals: bentonite, attapulgite and sepiolite. The minerals act as absorbers with capacity being dependent on mineralogical structure and properties, such as surface area, particle size distribution, porosity and surface activity.

Bentonites are a soft stone with the capacity to absorb substances dissolved in water and other liquids. The minerals have been formed over time due to the natural adaptation of volcanic ash.

Bleaching earths are found in mines around the world, including North America, South America, Europe, the Middle East and Asia.

Dry bleaching vs wet bleaching

The two different methods utilising bleaching clays in the refining process are dry bleaching and wet bleaching. According to Alfa Laval, dry bleaching is the traditional method used for bleaching oils and fats. It is most common in Europe and Asia, but is used worldwide.

The process first involves heating the oil, then mixing it with bleaching earths or activated carbon (or a mix of both). This process takes place under vacuum – which prevents oxidation – and with a sparging steam (the direct injection of steam in order to heat the oil with very high energy levels). Because the bleaching takes place under vacuum of about 70 torr, the humidity of the oil is greatly reduced.

Following the bleaching process, the powder is removed using pressure leaf filters and is collected in a buffer tank, which also operates under a vacuum.

Dry bleaching requires a much lower initial investment than wet bleaching. The operating costs are also significantly less due to the use of plate heat exchangers, which require lower consumption of utilities. The process is also relatively easy and straightforward and requires only minimum space for set-up.

Wet bleaching, on the other hand, involves the addition of water in the process. Water makes bleaching earths work more efficiently, which means that less can be used, and oil losses are also reduced. Wet bleaching is attractive due to the lower costs of the process itself, even though start-up costs are higher. Water is added in the form of a citric acid solution, after the oil has been

heated and before the bleaching earths are mixed in. The citric acid helps to bind trace metals and decompose residual soaps.

Activated and natural

Natural bleaching earth is a type of bentonite or attapulgite clay, which is absorptive in its natural state. It is processed, but in a physical rather than a chemical way. Activated bleaching earth also comes from bentonite clay, but contains a higher proportion of montmorillonite. Activated bleaching earth is given a chemical treatment to alter the clay and give it properties that increase its bleaching potential.

According to Louis L Richardson in the paper Use of Bleaching, Clays, in Processing Edible Oils, activated clays are much higher in bleaching

efficiency, in particular when used on very dark oils and those with a very high cholorphyll content. However, natural or physically activated bleaching earths do have their own uses due to their lower acid levels.

Activated bleaching earth market

In a new report on the activated bleaching earth market published in April, research carried out by Grand View Research Inc concludes that the market is expected to be worth US$3.59bn by 2022. The increased production of edible oils in the Asia Pacific region is cited as the key factor that will drive the market. In particular Malaysia, Indonesia, China and India are the main countries driving demand in the region, due to an increase in edible oil production on account of growing populations.

Naturally bleached vegetable oil, shaped by ONE ALL-ROUND SOLUTION: TONSIL®.THE GOLD STANDARD FOR EFFICIENT AND SUSTAINABLE OIL, FAT AND BIOFUEL PURIFICATION: TONSIL® BY CLARIANT FUNCTIONAL MINERALS.

Powerful against undesired odor, flavor and impurities from crude oils and fats, Clariant’s TONSIL® bleaching earths have now been in use for more than 100 years. To meet today’s growing global demand and ensure certified solutions for your scope of applications, we constantly carry out research into new products as well as into the rapid and flexible optimization of TONSIL® qualities in Europe, America and Asia. In many countries, TONSIL® has already become synonymous with activated bleaching earths, which we view as both a challenge and an obligation for the future.

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TONSIL® bleaching earths set a standard for the efficient and sustainable purification and refinement of edible oils, biofuel feedstocks and technical waxes.

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BLEACHING EARTHS


In addition, the report found that Central and South America will also see a significant growth in the market, predicted to rise to a value of US$350M by 2022. Argentina’s production of edible oils and fats is expected to increase in the period between now and 2022, which is further expected to increase demand for activated bleaching earths.

Market demand for activated bleaching earth was 5.98M tonnes in 2014 and was predicted to rise to 8.65M tonnes between 2015 and 2022. According to the report, the leading application segment, accounting for more than 80% of the total activated bleaching earth market, was edible oils and fats.

In addition to findings relating to the value of the market, the research also found that the activated bleaching earth industry is highly fragmented, and there are a large number of small players scattered worldwide.

Spent bleaching earth (SBE)

A waste material is produced through the edible oil bleaching process, which is called spent bleaching earth (SBE). Because of the nature of the bleaching process, SBE contains a percentage of oil. According to the report, The Effect of Spent

Bleaching Earth Ageing Process on its Physicochemical and Microbial Composition and its Potential Use as a Source of Fatty Acids and Triterpenes, despite many years of research, this waste material is still a “serious and unsolved, economic and ecological problem”.

The report says that in 2014, 1-2M tonnes of SBE was produced by the industry worldwide, and the SBE contained between 25% and 40% oil, as well as various contaminants that it removes in the process. The SBEs have a diverse composition, which makes them difficult to manage and dispose of. They contain water-insoluble substances such as fatty acids, macro- and micro-elements, plant pigments and heavy metals.

Decomposition in the environment is slow and inhibited and ecological reasons usually prevent this type of disposal. The report also dissuades against open-air storage, saying it could cause spontaneous combustion. In the EU, SBE is classified as a hazardous waste.

Bleaching earth companies try to reduce the amount of SBEs produced in the process, as well as how much oil the earth contains. In addition, finding a use for SBEs or SBE oil can help to reduce waste. For example, Neste Oil has been using SBE oil as a raw material in its NEXBTL renewable diesel base since 2013.

A report in 2013 written by Soh Kheang Loh et al demonstrates how SBE could be used as a bioorganic fertiliser. The SBE was co-composted with some agricultural and palm oil milling by-products in order to produce a fertiliser. The report says that due to adequate amounts of “beneficial

A QUARRY ON THE ISLAND OF MILOS, GREECE WHERE BENTONITE IS MINED

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Clariant has increased production capacity for its Tonsil bleaching earths and Tonsil Coarse Optimized (CO) grades at its Puebla site in Mexico by 30%. The additional capacity came on

stream in April, concluding two years of work to expand the facilities.Pueblo is Clariant’s Functional Minerals unit’s second biggest bleaching earth production site.

It is close to the company’s mine and the supply chain that connects it to customers in North and South America.

According to Clariant CEO Hariolf Kottmann: “This latest expansion will enable us to respond to new market opportunities being created by rising demand in both North and South America.”

The expansion in Mexico is part of Clariant’s multimillion Swiss franc expansion plan for bleaching earths, which will include further investments in Mexico, Turkey and a new site in Indonesia.

Geohellas produces the MAK series physically activated bleaching earths,

designed specifically for oxidation-sensitive oils. These products are made from attapulgitic clay, selectively mined in northern Greece.

In the production of MAK, Geohellas employs mechanical and thermal methods to physically

activate the clay’s high natural porosity and surface area. Because the activation process does not employ acids or chemical additives, MAK is ideal for the production of speciality, as well as high spec commodity oils, the company says.

Although MAK was initially designed for a niche markets (such as speciality oils, omega fish, olive and organic oils), Geohellas says the product has now proven itself very effective in a wider range of oil types. These include oils where acid-induced 3-MCPD cannot be tolerated. “Thus, with physically activated MAK, the company’s clients have found that they do not need to sacrifice decolorisation for oil quality, and can have both – reducing the tendency for unwanted by-product formation,” Geohellas says.

Water conservation is a critical issue worldwide, says Oil-Dri. “Countries

across the globe are keenly aware of current water usage levels and the need to manage this resource for the future. One country in particular, India, is facing an acute water shortage. Groundwater levels have dropped drastically resulting in drought conditions, electrical shortages are common from lack of water to generate steam, and very little water is left in many reservoirs. Companies are increasingly aware of the benefits of conservation to drive down escalating costs of water,” the company says.

Oil-Dri’s Select line of adsorbent technology products offer refineries an opportunity to save on water usage costs. “Using Select allows for the elimination of water wash centrifuge units. Select achieves similar results to water washing, but cuts down on overall water use and eliminates oil loss in waste waterstreams off the centrifuge. The adsorbent is best added in a dedicated slurry tank before the addition of bleaching clay,” Oil-Dri says.

Recently, Oil-Dri has promoted Select as a water wash centrifuge replacement to water-starved markets as a conservation tool. “Customers are producing high quality oil while seeing a reduction in water usage, achieving significant savings in water related costs, and doing their part to help with the water crisis.”

Clariant expands Tonsil production in Mexico

New applications for physically activated MAK

Oil-Dri’s Select line helps to save water

BLEACHING EARTHS


mineral elements; improved organic carbon; cation exchange capacity (CEC); water-holding capacity and carbon to nitrogen (C:N) ratio”, the SBE fertiliser had a positive impact on soil physical attributes.

Advancements & developments

Recent developments in the bleaching earths industry include the introduction of speciality bleaching earths to be used to lower the amount of 3-chloropropane-1,2-diol (3-MCPD) in edible oils and fats.

3-MCPD is a chemical compound that can be created in some margarines, vegetable oils and animal fats when heated. It is suspected of being carcinogenic and genotoxic, and tests are carried out to ensure foods do not contain dangerous amounts. The European Food Safety Authority (EFSA) has acknowledged the health risks associated with 3-MCPD, and other research institutes are assessing its presence in refined edible oils and fats.

According to bleaching earth supplier Clariant, specific bleaching earths can be utilised to reduce the production of 3-MCPD during the heating and refining process.

In the book, Processing Contaminants in Edible Oils, B Matthäus and F Pudel recommend the “use of natural bleaching earths and acid-activated

bleaching earths with more neutral pH values”, in order to significantly decrease the content of 3-MCPD in edible oils.

A study conducted on behalf of AOCS in 2014 researched the effects of degumming and bleaching on 3-MCPD esters formation during the physical refining process of palm and rapeseed oils. Results showed that the lowest levels of 3-MCPD were detected when the oil was degummed with water and bleached using natural bleaching clays. Levels were at their highest when the oil was phosphoric acid degummed and bleached with acid activated bleaching clays. “The findings revealed the contribution of acidic conditions on the higher formation of 3-MCPD esters,” the report concluded.

Clariant introduced four new grades of bleaching earth in 2013, which were designed to improve the reduction of 3-MCPD of up to 30%.

Greek company Geohellas specialises in physically activated, attapulgite bleaching earth

most suitable for a mild contaminant removal process and for companies trying to avoid acid, it says. In particular, the company says its product is used by those wishing to create an organic edible oil, and for the reduction of 3-MCPD (due to low acidic levels). �Rose Hales is OFI’s editorial assistant

A CLOSE-UP VIEW OF THE TONSIL BLEACHING CLAY SOLD BY CLARIANT, AND A DIAGRAM OF HOW THE LAYERS AND POROUSITY OF THE CLAY WORKS TO REMOVE IMPURITIES

PHOTO: CLARIANT


Dream or nightmare?The world of oleochemicals is facing overcapacity, according to Norman Ellard, but is it a dream or is it a nightmare?

OLEOCHEMICALS


In the 1980s, the oleochemical market was fairy simple, however between 2012 and 2014 capacity soared by 30% and caused the market to enter overcapacity, Norman Ellard, president of I P Specialities Asia, told

the recent Price Outlook Conference (POC) 2016 in Malaysia. In 2016 the estimated capacity for fatty acids was 12M tonnes, with a market of 10M tonnes; the fatty alcohol capacity was estimated to be 4M tonnes, with a market of 3M tonnes. As these figures show, supply surpasses demand in both the fatty acid and fatty alcohol markets. But does this necessarily have to be a problem?

Catalysts for growth

The main catalyst that caused overcapacity in the oleochemical market was the growth of palm oil and subsequent growth of palm kernel oil (PKO). Palm oil began to generate good profits, triggering big investments downstream.

There was an expectation that emerging economies, such as China, would continue a path of fast growth. Ellard admitted that China excited everyone, but did not turn out to be as exciting as was previously thought.

People entered the oleochemical market for a variety of reasons. Plantation owners and feedstock producers saw oleochemicals as a hedge against possible low feedstock prices and potentially negative tax policies in some regions. By supplying the oleochemicals sector, profits from feedstock could be better utilised.

Ellard said that the cost benefits of backward integration were clear in the oleochemical industry, and the supply was reliable. There was also a perception of higher prices.

This combination of factors resulted in a very competitive situation. According to Ellard, fatty alcohols move more with the end market. And in terms of low capacity utilisation, it was easier to run a fatty acid plant at lower utilisation than a fatty alcohol plant. Fatty alcohol was also a very limited market with only five major companies buying it, mainly for detergents.

Furthermore, capacity has not rationalised and no plants have shut down. Ellard said it was difficult to see capacity rationalising in 2016, causing a continuation of the overcapacity nightmare and a wait on the realisation of the dream situation.

The world economy and crude oil

The state of the world economy in general has also had an effect on the oleochemical market. Although the recession is continuing to loom, Ellard says he is optimistic about the future. Importantly, protectionism is the trend of the day, which is affecting the oleochemical and natural alcohol markets. Examples such as European tariffs

+1M tonnesNatural Synthetic

FIGURE 1: NEW FATTY ALCOHOL CAPACITIES GLOBALLY 2012-2014

FIGURE: I P SPECIALTIES

fractions) with steam. Ellard quoted some experts as saying that “the world is turning to synthetic alcohol”, however, Ellard argued that there is not currently a large capacity for synthetic ethanol. He admits there will be capacity in the future but that synthetic ethanol plants will take time to build.

The future does not necessarily have to look bleak for the oleochemical and natural alcohol market, however. Ellard said that in the 1960s when synthetic alcohol was introduced, it was at a cost well below the cost of natural alcohols at the time. This cheap price generated huge growth in the detergent market and related technologies. Then in the late 1980s and early 1990s, an oil palm upsurge in Southeast Asia caused the amount of the by-product palm kernel oil (PKO) to increase rapidly, in turn generating a large build-up of natural alcohol, bringing down their prices. The question being asked, therefore, is could this happen again?

on palm oil products, taxes in Southeast Asia on exporting CPO and tariffs in India on fatty alcohols support this theory.

“The old standard used to be that oleochemicals grew by 4% per year, meaning the need for one world-scale plant per year”, Ellard said.. In 2015 the International Monetary Fund (IMF) estimated global growth in the oleochemical market at 3.1%, the 2016 estimate is at 3.4% and by 2017 this will rise to 3.6%,“so we are getting back to the former metrics”.

“The real issue is China is not growing as fast as it was. However it is still growing”. Ellard predicted a rebound in emerging markets

The oleochemical market is doubtless inexplicably linked to the crude oil market and prices. Ellard discussed the effect of historically low crude oil prices on the oleochemical industry in his presentation, calling it the “elephant in the room”.

If crude oil prices had remained at 2014 levels, oleochemicals would not have struggled as crude palm oil (CPO) would have had a floor. However, this evidently did not happen and crude oil prices fell to extremely low levels.

With such low-priced feedstocks, the petrochemical industry experienced a resurgence, especially in the USA, stemming not only from crude oil but also a profusion of cheap natural gas. In March natural gas was priced at the equivalent of US$12/barrel, Ellard said. The booming petrochemical industry has generated a variety of new projects, at least one of which will bring new synthetic alcohol capacity by 2018.

Synthetic alcohol, or synthetic ethanol, is made by reacting ethane (a product of cracked crude oil

oleochemicals.indd 1 09/06/2016 12:15

OLEOCHEMICALS


Black Sea Оil Trade 2016

O R G A N I S E R

7 September

2016Hilton Kyiv, Ukraine

I V I N T E R N A T I O N A L C O N F E R E N C E

Leading event of the Black Sea Oil&Fat industry

The future of oleochemicals

Sustainability undeniably comes into the discussion regarding the future of oleochemicals and oleochemical products. Sustainable products

expert Albe Zakes wrote a blog in the Huffington Post in February in which he explained the unconscious consumer bias against sustainable or ‘green’ products, which are perceived as more expensive and less effective. He says that only at the point at which consumers buy the products without even realising they are ‘green’, will the industry have succeeded.

Such reasoning required a new response in oleochemicals, Ellard said. The market is starting to resemble the petrochemical industry more and more. New ‘mega plants’ are being built with outputs in the millions of tonnes. The mega plants can run on very low margins, especially if they are backed by a plantation company.

To be successful in oleochemicals today, players need to either integrate forward from feedstock production, or backwards into consumer products, Ellard said. They either need to be big, or they need to be speciality niche products.

The glycerine example

A good example of excess production, in the context of oleochemical overcapacity today, is glycerine. Quantities of glycerine, a co-product of oleochemical and the biodiesel production, have reached around 3.5M tonnes/year. Glycerine is not produced on demand, but is generated through oleochemical and biodiesel production. When biodiesel production started becoming big in the 1990s, the industry was hugely concerned about the abundance of excess glycerine that would need to

be disposed. However, in response, new uses for glycerine were

generated in a wide range of industries. Glycerine even became competitive in particular markets and the excess was easily mopped up.

As the industry has changed again in recent years and biodiesel use has declined due to low crude oil prices, glycerine production has decreased and simultaneously the new glycerine uses have become uncompetitive in comparison to the price of petrochemicals, and demand for it has returned to traditional oleochemical uses.

The future opportunity

The oleochemical industry needs the economy to improve, which it is, Ellard said. Although 2016 could be another tough year, it will not be worse than 2015. Fatty acids are both well priced and widely used, and there are no new technologies which will replace them. Fatty alcohols are also projected to remain competitive and also well priced. Low cost synthetic alternatives might drive PKO prices to reflect the fact that it is a by-product, which Ellard believes has the potential to stimulate demand. He forecast average prices for 2016 at US$550-600/tonne for palm oil and US$950-1,000/tonne for PKO.

Looking further into the long term, Ellard believes the markets will catch up with the capacity available. With innovation and good marketing, the volume can be built sooner rather than later, he says. �This feature is based on a paper presented at POC 2016 in Kuala Lumpur, Malayia 7-9 March 2016 by Norman Ellard, president of I P Specialities, Asia, ‘Overview of Oleochemicals 2016: Living the Dream or the Nightmare?’

FIGU

RES:

I P

SPEC

IALT

IES

PHOTO: MAKSYM

YEMELYANOV/ADOBESTOCK

FIGURE 2: TRADITIONAL VIEW OF THE OLEOCHEMICAL INDUSTRY

FIGURE 3: VIEW OF THE OLEOCHEMICAL INDUSTRY IN 2014

oleochemicals.indd 2 09/06/2016 12:16

Moroccan olive oil is making particular headway in Chinese markets. By careful marketing and investing fully in China, MiM Asian Market is tapping into the boom in Chinese olive oil consumers and seeing results. Eliza Volkmann reports

MOROCCO

China’s new found taste for olive oil is growing, opening up new sales channels for olive oil-producing countries and Morocco is one potential beneficiary. Morocco is the fourth largest exporter

of olive oil and olives after the European Union (EU), Turkey and Tunisia, currently producing between 100,000 and 120,000 tonnes/year of which 25,000 tonnes are exported.

Since 2010 the International Olive Council (IOC) has been raising awareness of the benefits and taste of olive oil to the newly affluent Chinese middle classes. Now, for the first time, a Moroccan export company – Made in Morocco Asian Market (MiM) – is bringing the taste of Moroccan olive oil to Chinese tables.

The company was co-founded by experienced Morocco export and marketing expert Tarik Bennouna, MiM’s managing director. His company’s marketing stresses how it is following in the pioneering footsteps of Ibn Batutta, a famous 14th century Moroccan traveller who explored China. His voyages reflect the ambition of Italy’s Marco Polo, who visited China in the previous century – and while Bennouna admits Morocco’s olive oil sector is late in selling to China (notably later than the Italians), he believes that Moroccan extra virgin olive oil has a place in this growing market: “Why now? There is an old Chinese proverb – ‘The best time to plant a tree was 20 years ago, the second best time is now,’” he tells Oils & Fats International (OFI).

China’s growing market

After attending Asia’s largest food and beverage show, Shanghai SIAL 2014, Bennouna says he decided to exploit this growing market, starting with exports of Moroccan extra virgin olive oil. His plan is to follow this up with sales of other Moroccan food products and delicacies: “MiM [started] as an idea/project in June 2014 right after Shanghai SIAL,” says Bennouna, whose partner and co-founder of the company (and its CEO) is Mehdi Laraki, an olive oil producer. MiM sells products from his company Tazakourt, such as brands Perle d’Or, La Goutte d’Or, Prestige and Sahara. MiM also exports other Morocco companies’ olive oil brands to China, such as Atlas, Desert Miracle and Les Terroirs de Marrakech.


EXAMPLES OF MIM’S EXTRA VIRGIN OLIVE OIL, PRODUCED FOR THE CHINESE MARKET

PHOTO: CONSTANTINOS/DOLLARPHOTOCLUB.COM / PHOTO: M

IM ASIAN M

ARKETS

Fighting for China

Moroccan Olive Oil.indd 1 14/06/2016 11:28

‘The IOC predicts that Morocco will produce 110,000

tonnes of olive oil in 2014/5, compared to 120,000 in 2013/4.

There has been significant growth in production since the

mid-2000s’

MOROCCO


“We are convinced that there is enough space for good quality Moroccan olive oil. Morocco represents 5% of the world production. Quality, marketing and distribution are key to get market share,” he stresses.

The initiative meshes with Morocco’s Vision 2020 – government economic development plans, which stress the exploitation of its olive culture as a potential boon.

China has become a major market for olive oil, with the Madrid-based IOC actively promoting olive and olive oil sales in China since 2010. According to the IOC, some 43,000 tonnes of olive oil was imported and consumed in China in 2013, up from 33,227 tonnes in 2010. The most popular product category in China is extra virgin olive oil. Morocco’s exports of olive oil to China grew from 300 tonnes in 2013 to 1,000 tonnes in 2014, according to Oil World figures. The growth in consumption is partly due to Chinese middle-class consumers seeking out new gastronomic styles and partly sparked by a growing trend towards healthy eating, promoting appreciation of Mediterranean diets.

Challenges

Despite this growth, starting up in China is challenging, Bennouna explains: “The most difficult part was to decide which kind of company we wanted to create: a branch, a trading company, a consulting company… The choice will imply the minimum capital of the company, the main resources [we need] to hire, the cost of some licences,” such as CIQ (China Inspection and Quarantine) registration – a health certificate required for each product imported into China.

“Chinese regulations are strict and hard to navigate”, he says. However, he notes that for his field, “the most important element is that, as a foreigner, you can open your own company in China and keep 100% of the capital – no need for a local partner or sponsor.

“Our approach was to be assisted in the process by experts: we have hired a consultancy company that gives us advice on the company structure we have to choose, about the location of our offices as well as helping in getting all the admin and legal paper work.” Bennouna made use of the time spent on red tape “by attending fairs and events, meeting some potential customers, building up our network (‘guanxi’) and developing an added value proposition to be … different from our competitors.”

MiM was further helped by taking part in the first Moroccan-Chinese Economic Forum held in November 2014 in Beijing, a trade mission organised by the government and led by the General Confederation of Moroccan Businesses; the Ministry of Foreign Affairs and Cooperation; and the Group of Professional Moroccan Banks. A number of agreements were signed, notably agreements between Chinese and Moroccan banks regarding issues such as currency and equity transfers between the countries. Bennouna tells OFI: “[The] Moroccan government is putting huge efforts and investment to help and support companies finding business opportunities outside the country. Some governmental organisation such as Maroc Export are supporting Moroccan companies by financing some fairs, other organisations are giving export subsidies.”

MiM has already successfully exported several containers of olive oil to China and its products are fighting for sales with more established exporters from Greece, Italy, Spain and Tunisia. Bennouna says: “My competitors are not brands, my competitors are countries so I have to be different, more creative, more flexible, to be able to put my products in the market.” Spain was the first to enter the market and currently holds a 60% market share.

One strategy for MiM is to operate locally, helping it understand this new market: “Language is the first barrier; then I have to say that gaining the trust is a big part of the job as well as

�

MIM ASIAN MARKETS’ MANAGING DIRECTOR TARIK BENNOUNA

understanding the needs and constraints of our clients.” Rather than operating solely from its headquarters in Casablanca, MiM has opened an office in Shanghai: “We strongly believe that the opening of the office in China is a very important step toward success and trust. By opening, we gave a strong message: we understand that the market is very big but we want to show that we are not in China for dealing, we are in China for trading and for the long term.” The permanent office includes five staff, three of whom are Chinese as well as a China-based Moroccan. Bennouna splits his time between Morocco and China.

This has helped the company deal with the difficulties of operating in the Port of Shanghai, creating the right logistics, liaising with local logistics firms used to handling such products and procedures.

MiM has also carefully configured product sizes, with research guiding them to starting with one litre and five litre consumer-sized bottles, and expanding into catering sizes and bulk quantities. In addition, it is trying to be smart with regional marketing: “We are entering the market via Shanghai, Beijing and Hong Kong but we want to target [smaller] ‘tier 2’ and ‘tier 3’ cities, as those are where the growth is coming from and we will have less pressure from the big players.”

Marketing Morocco

Unlike Spain and Italy, Morocco and its cuisine are not well known in China, so marketing is important: “We do our best to communicate the history of our brands.”

MiM attends relevant food shows, such as FHC (Food Hygiene China), and is working closely with the country’s embassy to promote Morocco as a brand “linked to prestige, taste, and history – we push our products thanks to their quality, beauty and authenticity.”

The need for such marketing was underlined by market research on 150 Chinese consumers. While 92% of the focus group said they had used olive oil and 47.7% cooked at home between five and 10 times per week, in a test only 3.3% could successfully identify olive oil and only 2.7% (four people out of 150) had the knowledge to classify olive oil: “Currently [we are] working on how to promote Moroccan cuisine in a more consumer oriented way: maybe tasting sessions in shopping malls, online promotions – China is very advanced in online buying.”

The IOC certainly has been helping, assisting in organising Chinese media tours to olive oil producing nations including Morocco, engaging with food bloggers and creating China-based consumer events such as ‘Olive Week’, while creating media releases on cooking with olive oil, with information including recipes.

Looking forward, Bennouna says his company is considering exporting other oils: “Palm, colza and sunflower are very in demand as they can be used to fry food”. He added: “Asia-Pacific is a huge market with increasing purchase power”, noting that regionally – and helpfully – the Muslim community is very populous: “With the halal label we have on our products, we can differentiate from our competitors.” Beyond China, MiM Asian Market has its eyes on Indonesia, Malaysia, Singapore, South Korea and Taiwan.Eliza Volkmann is a freelance journalist

PHOT

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Moroccan Olive Oil.indd 2 14/06/2016 11:28

STATISTICS


SOYABEAN OIL PRICES ROTTERDAM (EU€/TONNE)

RAPESEED OIL PRICES ROTTERDAM (EU€/TONNE)

SUNFLOWER OIL AND SEED PRICES EU (US$/TONNE)

PRICES OF SELECTED OILS (US$/TONNE)

STATISTICAL NEWS FROM MINTEC

Soyabean oilSoyabean oil prices are still at high levels, driven by concerns over damage to South American crops and tightened supply of palm and rapeseed oils. The South American crop has recently been damaged by heavy rains in Argentina, flooding in Uruguay and dry conditions in Brazil. Although the losses are still being estimated, global soyabean production for 2015/16 has already been revised down by 4M tonnes to 315.9M tonnes, 3M tonnes lower year-on-year.

In the new 2016/17 season, soyabean production is expected to rise 3% to 324.2M tonnes. Production of soyabean oil is also expected to rise 3% to 53.6M tonnes. Ending stocks of soyabeans are forecast to fall 8% to 68.2M tonnes.

Rapeseed oilRapeseed oil prices have been stable in recent months, but remained at relatively high levels supported by tight stocks. Global production of rapeseed in 2016/17 is set to fall 3% year-on-year to 66.1M tonnes. Rapeseed production in Canada, the world’s top exporter, will fall by 10% year-on-year to 15.5M tonnes, while the EU will also see a 1% year-on-year decline in production, forecast at 21.8M tonnes.

Ending stocks of rapeseed are forecast to fall sharply by 31% to 3.4M tonnes. Rapeseed oil production in 2016/17 is forecast to fall 3% to 26.4M tonnes.

Sunflower oilGlobal production of sunflower seed in 2016/17 is expected to rise 5% to 41.2M tonnes. Ending stocks of sunflower seed are estimated to fall 26% year-on-year to 1.3M tonnes. Production of sunflower oil is forecast to rise 5% to 15.8M tonnes. Good supply is expected from Black Sea producers. Exports from Ukraine are set to rise 10% to 4.5M tonnes, and Russian exports are also set to rise 10% to 1.7M tonnes.

Plantings have been progressing well so far in both countries, ahead of the seasonal average, with favourable weather conditions forecast to continue into early June.

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world’s most prestigious brands to make informed commercial decisions.

Tel: +44 (0) 1628 851313E-mail: [email protected]: www.mintecglobal.com

2014 2015 Feb 16 Mar 16 April 16 May 16

Soyabean 897 765 749 759 799 801Crude Palm 825 676 658 690 727 701Palm Olein 762 650 630 662 702 666Coconut 1,276 1,358 1,220 1,441 1,571 1,413Rapeseed 906 787 781 773 811 798Sunflower 905 853 851 842 858 873Palm Kernel 1,120 1,116 994 1,208 1,289 1,188

Average price 956 887 840 911 965 920INDEX 226 210 199 216 229 218

Statistics.indd 1 09/06/2016 12:01

OFI June IBC_HF Lipi.indd 1 10/06/2016 12:39

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OFI June OBC_Buhler.indd 1 10/06/2016 13:50

OFI June 2016

Documents

Transcript of OFI June 2016