The biodiesel market is experiencing its lowest prices since June 2023 (see Figure 1). The Vesper West-EU Price Index for RME (2024-02-06) decreased by 1.5% to €1032 | $1109 / mt (FOB ARA) from €1048 | $1135 / mt on 2024-01-30. Similarly, the Vesper West-EU Price Index for UCOME (2024-02-06) decreased by 0.3% to €1160 | $1246 / mt (FOB ARA) from €1157 | $1253 / mt on 2024-01-30. However, there was a marginal increase of 1.2% in the Vesper West-EU Price Index for FAME 0 (2024-02-06), rising to €976 | $1049 / mt (FOB ARA) from €965 | $1045 / mt on 2024-01-30. Read below, the four reasons behind why biodiesel prices, now at their lowest levels since June 2023.
Figure 1: Vesper Spot Outright Biodiesel Prices (USD/mt)
The decrease in biodiesel prices is due to several factors:
- Market liquidity in Europe is sluggish, exacerbated by the closure of Asian markets for the Chinese New Year.
- Ongoing freight disruptions from Asia are causing disruptions in the container business.
- LSGO (Feb 24) settlement price (ICE EU) decreased to €783 | $841 / mt (2024-02-06) from €782 | $848 / mt on 2024-01-30. This decline in oil prices can be attributed to growing optimism over an extended ceasefire in the Israel-Hamas war, a surge in the US Dollar Index following robust U.S. monthly jobs data, and the Federal Reserve’s decision to downplay expectations for early interest rate cuts in 2024. Additionally, contracting manufacturing activity in China has further weighed on oil prices.
- Despite high feedstock prices due to ongoing demand from oil majors, biodiesel buyers are hesitant to accept price increases, resulting in tight profit margins for smaller biodiesel producers. Traders however anticipate a shift in feedstock sourcing, with biofuel producers likely to turn to Asian markets more due to low volumes in Europe.
