The latest biodiesel market update shows that the European biodiesel complex has strengthened since the previous week (see Figure 1).

Biodiesel market update
Figure 1: Vesper Spot Outright Biodiesel Prices (USD/mt)

  • The Vesper West-EU Price Index for RME (2024-01-15) increased by 0.2% to €1115 | $1223 / mt (FOB ARA) from €1113 | $1218 / mt on 2024-01-08.
  • The Vesper West-EU Price Index for UCOME (2024-01-15) increased by 1.4% to €1184 | $1298 / mt (FOB ARA) from €1167 | $1276 / mt on 2024-01-08.
  • The Vesper West-EU Price Index for FAME (2024-01-15) decreased by 0.5% to €985 | $1080 / mt (FOB ARA) from €990 | $1082 / mt on 2024-01-08.

Prices have risen due to increased demand and higher LSGO prices. However, in the European market, there is disagreement among participants regarding prices. While buyers express interest, they are reluctant to offer higher prices and are attempting to negotiate lower rates with sellers. Some sellers are accepting current market rates to maintain inventory turnover, while others are holding out for better prices. Notably, buyers from outside the EU, such as those in the Middle East, are willing to pay higher prices. In related news, there is a growing interest in marine fuels, with reports indicating a threefold increase in bunker sales of biodiesel blends in Singapore in 2023.

Regarding LSGO prices, the LSGO (Feb 24) settlement price (ICE EU) has increased to €727 | $794 / mt (2024-01-16) from €697 | $764 / mt on 2024-01-09. This increase is primarily attributed to geopolitical developments in the Middle East. The Houthi movement in Yemen announced plans to expand their targets in the Red Sea region, including U.S. ships, in response to U.S. and British strikes on their sites in Yemen. These strikes were a reaction to Houthi attacks on shipping in the Red Sea, aimed at safeguarding crucial shipping routes. The U.S. and Britain indicated they would take further measures if the attacks persisted. The U.N. Security Council passed a resolution demanding an immediate end to the Houthi strikes.

In other news, Iran seized an Iraqi crude oil tanker bound for Turkey last week as retaliation for the U.S. confiscating the same vessel and its cargo last year. This act has raised concerns in the market about the Israel-Hamas conflict potentially escalating into a broader Middle East crisis, impacting oil supplies, especially those passing through the critical Strait of Hormuz. White House national security spokesperson John Kirby expressed no justification for the seizure and called for its release, further fueling regional tensions.

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