European biodiesel markets moved substantially higher in May. FAME 0 rose from $1,382 to $1,500 per tonne compared to the same period last month. UCOME reached $1,652 per tonne, up from $1,545. FAME -10 rose from $1,430 to $1,530 per tonne. The German Bundestag’s adoption of RED III was the decisive regulatory catalyst. The legislation abolishes double counting for crop-based biofuels, raises the cap on crop-based fuels in the GHG quota, and bans palm waste-derived fuels from 2027. The Netherlands has also abolished double counting. Market participants report good processing margins and notably higher activity following the German vote.

The geopolitical backdrop amplified the move. Low-sulfur gasoil rose from $1,086 to $1,234 per tonne as US-Iran tensions escalated, with the US threatening to resume attacks and Iran announcing a new body to oversee the Strait of Hormuz. HVO prices firmed on stronger demand, with margins reportedly around EUR 600 per cubic metre, according to Greenea. HVO using UCO feedstock reached $2,955 per tonne, and HVO using tallow reached $2,874 per tonne.

The supply side had a notable development. Shell confirmed it will not complete its SAF and renewable biofuels project at Pernis, Rotterdam, with process units now being marketed for sale. The withdrawal reduces expected European HVO and SAF capacity build-out, supporting margins for Neste Rotterdam, ENI, and Repsol. Spain’s Repsol announced a 15 to 20 percent increase in jet fuel and SAF output across its five Spanish refineries in response to Iran war supply disruptions, with EUR 1.2 billion allocated to building crude inventories.

UCO prices rose more slowly than biodiesel margins would suggest. Greenea attributes the lag partly to US cuts in UCO imports combined with increased global collection rates, which have loosened the overall UCO balance. China’s UCO imports hit a record high in Q1 2026 at 773,623 tonnes, up from 579,192 tonnes in Q1 2025. EU UCO imports during January to April 2026 were 667,331 tonnes, down from 741,982 tonnes in the same period a year earlier. US UCO imports in Q1 hit a record low of 233,563 tonnes.

The full Vesper biodiesel report covers the regulatory landscape, HVO and UCO dynamics, and global trade flows in detail: https://app.vespertool.com/market-analysis/3010