In comparison to the previous week’s figures, the price of UCOME has risen. The Vesper Spot Outright Index FOB ARA for UCOME (08/08/2023) increased from $1486 / mt to $1524 / mt. Market insiders indicate that buyers have increased the price due to low trading activity at prior price levels. The market remains relatively inactive, with UCOME liquidity registering as low. A UCOME producer based in Spain confirmed, “Prices increased, margins widened, but the liquidity hasn’t changed much. The demand is slow.”
Moreover, increased UCO prices could also contribute to rising UCOME prices. The Vesper West EU Spot Price Index for UCO 5% FFA (08/08/2023) strengthened to $1108 / mt (EXW Netherlands), demonstrating an uptick from the $1102 / mt recorded during the same period the previous week (Fig. 1).
Fig 1: Vesper West EU Spot Price Index for UCO 5% FFA (USD/mt)
Decline in Chinese UCO and Biodiesel Exports
Recent data reveals a shift in the import/export landscape UCO and biodiesel from China. In the month of June, UCO exports from China witnessed a significant decrease, falling from 151,425 metric tons (mt) in May to 117,111 mt. The key destinations were Singapore, receiving 48,832 mt, and the United States, importing 58,837 mt. The United states reached a record number of UCO imports to fulfil its internal biofuel requirement, which is projected to persist due to regional eco-friendly fuel regulations and nationwide blending orders.
Interestingly, the UCO export figures destined for the European Union (EU) remained relatively steady in June, maintaining a volume of 32,618 mt, a marginal increase from the 31,849 mt recorded in May.
Fig 2: China’s monthly UCO exports into the EU (mt)
Zooming out to consider the broader biodiesel trade, Chinese biodiesel exports into the EU experienced a sizeable reduction (Fig. 3). June’s figures dipped to 141,699 mt from the previous month’s 176,520 mt. This decline in exports can be attributed to a sense of caution prevailing among EU biodiesel importers. This hesitance stems from ongoing investigations into potentially mislabeled biofuels originating from China.
Fig 3: China’s monthly biodiesel exports into the EU (mt)
Insights by market players
An insight from a biodiesel market player regarding UCOME pricing was shared with Vesper, pointing to the potential influence of the forthcoming WASDE report. “The Black Sea situation stopped being a price driver for the time being. A peak sunflower oil season in Ukraine will be in October, and the market thinks that logistics issues could probably be solved by then. In addition, the EU has strong vegetable oil stocks”.
Another EU-based biodiesel player commented, “I think that market participants in the EU purchased enough FAME 0 for this year and now look to buy more RME and UCOME”.
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