General view

The fuel generated from vegetable oils, is looking forward to the international opportunities that are being generated. On the one hand, on October XNUMX, a ruling by the World Trade Organization (WTO) favorable to Argentina and against the European Union was ratified, in relation to the antidumping tariffs imposed by the bloc on imports of national biofuels. .

On the other hand, in January of last year, the United States authorized the biodiesel coming from Argentina, to be used as vehicle fuel (previously biodiesel was exported to the northern country, but for other uses).

The US Environmental Protection Agency (EPA), which is the highest authority regarding restrictions on possible contaminants, was the one who issued the authorization on the 28th of that month. This last factor consolidated a significant growth in shipments to said country, which currently explains more than 90% of Argentine exports of this fuel.

It should be noted that the two largest international markets for biodiesel are the United States and the European Union. This is because, in the aforementioned places, as well as in our country, there is mandatory legislation, which implies mixing diesel fuel with biodiesel in a certain percentage.

For producing countries like Argentina, entering this type of market is key for a simple reason: with the current low oil prices, if there are no regulations that establish a minimum content of biofuels, it is difficult for refiners to use them on their own. alone. Without this demand generated by law, Argentina could not export absolutely anything.

Recent history

As seen in the graphic 1, Argentine biodiesel exports have been very volatile. In the last four years, the industry has faced three crises, from which it has subsequently recovered with greater or lesser success.

The first drop in exports occurred after the nationalization of YPF. At that time, the Spanish government imposed a sanction on Argentine biodiesel, eliminating national companies from the list of potential market suppliers. Prior to nationalization, Spain was the main destination for local biodiesel exports, which led to a considerable decrease in foreign sales.

However, months later the industry had already diversified its exports to other countries, although always within the European Union, a market with mandatory cutting, as the main destination.

It was at the end of 2013 when the hardest blow came to the national industry. The EU decided to apply a tariff for anti dumping between 217 and 246 euros per ton, which made exportation completely unviable. Months later, a new recovery arrived, although now thanks to state support.

In 2014, export duties applied to biodiesel were significantly reduced (from 22% to less than 10%), allowing producers to reduce their sales prices and begin supplying other markets where there was no obligation. to use biodiesel. These were times when oil derivatives had very high prices (with crude oil above USD 100 per barrel), and soy biodiesel appeared as a relatively economical option.

After so many complications, history seems to be optimistic again for biodiesel producers. Starting in 2017, Argentina will have unrestricted access to both the European and United States markets for the first time in history. Industry analysts estimate that, when the situation has completely normalized, it would be possible to export a total of 1,5 million tons to Europe, a value similar to what was originally sold.

If sales to the United States remain at the average observed in the last five months, this would imply that exports could rise to 3 million tons, which represents a value 80% higher than the export record observed in 2011. Thus, Total production could exceed 4 million tons.

However, not all the news is encouraging, and bilateral disputes continue to exist. Around the end of October, it was a Latin American country that began to apply antidumping duties to Argentine biodiesel. Is about Peru, who through the National Institute for the Defense of Competition and Intellectual Protection [Indecopi], through Resolution 189/16 established duties between US$122 and US$191,6 for a period of five years, which represent between 17% and 31,6% of the current FOB values. It is estimated that, due to this measure, US$150 million of exports will not enter the Quechua country.

International Look

According to estimates from the United States Department of Agriculture [USDA] in its annual report on biofuel in Argentina, biodiesel production could reach 3.100 billion liters, increasing the expected production for 15 by around 2016%. And an increase in exports of 13% is expected compared to 2016, but 90% compared to 2015.

In relation to productive complex, it is expected to maintain the same number of establishments that - since 2014 - have been in the national territory, that is, a total of 38 plants. However, there are investments announced for the sector, which will increase production capacity from 5.200 to 5.400 million liters from 2016 to 2017.

At the same time, to increase production, the use of installed capacity will rise from 49,8% to 57,4%, the highest percentage in the last 5 years. An increase in the national cut-off rate is also expected, going from 8,7% to 9,7%, reflecting an increase in local consumption of around 6%, reaching 1.400 million liters.

Although the great dependence that the legislation that requires the cut-off of diesel means for the biodiesel industry, this is not seen as a weakness, because it is unlikely that it will change, due to environmental pressure groups with great lobbying power.

On the other hand, it would be expected that, since both oil and soybeans are commodities; There was great volatility in their production and trade. However, this is not so. Mainly, the volatility in trading It originates from bilateral relations that can, as we have seen, apply protectionist or anti-dumping measures.

The main weakness of the biodiesel industry occurs in the medium term, and is the electric car. Pollution no longer exists in the use of the engine, but if present it would be found in the electricity generating plants, which could be controlled by the State.

The range of this type of car is increasing, as are charging stations. For example, the United States can now be crossed from coast to coast with the stations installed by one of the companies that produce this type of vehicle.