The biodiesel prices have weakened since the previous report, see Figure 1. The Vesper West-EU Price Index for RME (2024-01-23) decreased by 5.1% to €1081 | $1177 / mt (FOB ARA) from €1146 | $1252 / mt on 2024-01-16. The Vesper West-EU Price Index for UCOME (2024-01-23) decreased by 1.7% to €1173 | $1277 / mt (FOB ARA) from €1193 | $1304 / mt on 2024-01-16. The Vesper West-EU Price Index for FAME (2024-01-23) increased by 0.3% to €998 | $1087 / mt (FOB ARA) from €995 | $1087 / mt on 2024-01-16.
Figure 1: Price Comparison for FAME 0, RME, and UCOME West-EU in USD/mt
Market participants have informed Vesper that liquidity is gradually improving but remains lower than suppliers had anticipated. Suppliers are dissatisfied with current price levels and are attempting to sell only limited volumes. The recent drop in biodiesel prices caught the market by surprise, especially as LSGO and vegetable oils are on the rise, and feedstock supply from Asia to Europe faces challenges due to escalating transportation costs (see Figure 2) and increased delivery times. Nonetheless, there are reports, unverified by Vesper, of some buyers turning to China, particularly for HVO, which could potentially exert downward pressure on prices.
Figure 2: Price Comparison for FAME 0, RME, and UCOME West-EU in USD/mt
Traders have shared with Vesper that increased transportation costs and higher deliveries from Asia to Europe can significantly constrain feedstock supply in Europe, particularly for items like used cooking oil (UCO), as Europe relies on imports. This limited feedstock supply is expected to bolster feedstock prices in the EU, subsequently impacting biodiesel prices. Additionally, it is worth noting that China is finding profitable opportunities in exporting UCO to the US (see Chart 3), where lower-quality feedstock is accepted at competitive prices. The recent Suez Canal incident has also made shipping to the US more appealing for Asian sellers. However, at this point, the supply constraints haven’t been reflected in the prices.
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