EU biodiesel prices have witnessed an increase since the previous report, see Figure 1.

Figure 1: Price Comparison between FAME 0, RME, and UCOME for West-EU (USD/mt)

The Vesper West-EU Price Index for RME (2024-03-05) saw an increase to €1094 | $1187 / mt (FOB ARA) from €1074 | $1166 / mt on 2024-02-27, marking a rise of 1.9%. Similarly, the Vesper West-EU Price Index for UCOME (2024-03-05) rose to €1164 | $1262 / mt (FOB ARA) from €1144 | $1241 / mt on 2024-02-27, reflecting a 1.8% increase. In line with this trend, the Vesper West-EU Price Index for FAME 0 (2024-03-05) also climbed, registering an uptick of 3.6% to €1032 | $1120 / mt (FOB ARA) from €996 | $1081 / mt on 2024-02-27.

According to market sources, the rise in biodiesel prices could be linked to the escalation in used cooking oil (UCO) prices, which experienced a slight dip this week but have seen significant increases since November 2023.

For instance, UCO EXW Netherlands surged by 12.4% between Nov 2023 and Mar 2024, see Figure 2.

Figure 2: Prices for UCO 5%, FFA for West-EU (USD/mt)

UCO is a crucial feedstock in the EU, and some facilities seem to face challenges in swiftly transitioning from waste to vegetable oils. Factors such as the Red Sea crisis, heightened consumption at origins, and elevated prices in key exporting regions like the Middle East, Asia, and Latin America, coupled with subdued biodiesel prices in the EU, have recently constrained UCO supply into the EU as importers and blenders struggle to make margins, according to market participants.

Simultaneously, biodiesel prices have displayed weaker performance. For example, EU UCOME price (FOB ARA) rose by only 4.4% between Nov 23 and Mar 2024, while UCO-based HVO (FOB ARA) witnessed a significant 31% decline, see Figure 3.

Figure 3: Price Comparison between FAME 0, RME, and UCOME, and HVO, UCO for West-EU (USD/mt)

Market sources attribute the poor performance of the biodiesel prices to low prices for biodiesel tickets, notably the German GHG quota and the expansion of biodiesel production capacity in Europe, e.g. Repsol’s new plant in Cartagena and BP increasing coprocessing in multiple refineries. “HVO experienced a notable decline due to its higher margin, making it more susceptible to reduction in oversupply situations,” said one Austrian biodiesel producer. “Of course there was an impact from Sweden slashing its mandates,” said one Dutch broker.

Consequently, HVO is now trading at historically low premiums compared to RME, UCOME, and FAME0.

This juxtaposition of depressed biodiesel prices and rising UCO costs is squeezing biodiesel margins. Market participants are responding by incrementally increasing biodiesel prices amid growing uncertainty surrounding feedstock availability, although significant growth in EU biodiesel outrights is not yet evident. Overall, EU biodiesel market sentiment leans towards neutrality or slight bullishness if feedstock availability becomes critically constrained.

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