Biodiesel prices have firmed since last week, but so have UCO and rapeseed oil while LSGO weakened (see Figure 1), widening the biodiesel premiums. The market liquidity in the West EU has been slow due to the biofuel conference in Singapore last week, Labor Day this week, and the May Day holiday in China lasting from May 1 to May 5th. UCOME-UCO spread widened by $15 / mt to $250 / mt, while RME-RSO spread narrowed by 20$ to $118 / mt. Margins are pretty tight.

Figure 1 - ICE LSGO - Settle Jun 24 (USD:mt)
Figure 1: ICE LSGO – Settle Jun 24 (USD:mt)

Several sources reported to Vesper that the transportation costs from China to ARA are around $200 / mt. Market sources report to Vesper that those who have time-chartered vessels or very strong relationships with UCO suppliers can manage to work with these transportation costs, but others struggle. “There is a lack of ships for bulk shipments. Mainly, flexies are offered. In ARA, a good number of players are in a wait-and-see mode expecting an increase in FAME prices,” reported a source.

Vesper heard of a range between bids and asks, which, alongside the preparation for the holiday in China, resulted in the slow UCO market. “Bids and offers are far from each other. I saw a $100 / mt difference the other day for UCO in ARA. Either China FOB has to go down, or EU prices should go up to make it workable for biofuel producers in the EU,” reported one broker.

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