Since Vesper‘s last update a week ago, the European Union’s biodiesel landscape has presented contrasting patterns. UCOME (FOB ARA) witnessed a 5% decline, settling at $1455/mt. Simultaneously, FAME 0 (FOB ARA) fell by 1%, reaching $1190/mt. In contrast, RME (FOB ARA) increased by 2%, hitting $1382/mt. The vegetable oils market too, has displayed varied trends.
The rise in RME can presumably be attributed to record-high LSGO rates. On the UCOME front, insiders informed Vesper of potential pressures from Chinese biodiesel imports by leading European petroleum entities. A market participant commented to Vesper, “It’s either HVO or UCOME coming from China (maybe partly from Malaysia/Indonesia) that could be pressuring the biodiesel complex”.
Regarding LSGO futures (Settle Oct 23), after experiencing some volatiliy, they settled at $976/mt as of 19/09/2023. A spike in prices the previous week was influenced by multiple factors, including 1.) production cutbacks in Saudi Arabia, leading to strained global supply, 2.) optimism regarding Chinese demand following strong Chinese industrial and retail data, which boosted economic confidence, and 3.) limited expected oil production growth in the U.S, due to decreased drilling.
This week, however, prices declined as traders aimed to secure profits ahead of a highly anticipated Federal Reserve interest rate decision. Despite recent supply cuts by Saudi Arabia and Russia that pointed to tighter oil markets, there was some profit-taking after oil prices briefly reached their highest levels in 10 months. Additionally, signs of a larger-than-expected weekly draw in U.S. inventories suggested tighter markets, but rising gasoline inventories indicated a potential cooling of fuel demand in the U.S.
Go to the Vesper platform for more insights on the biodiesel complex.