13 July 2006 16:12 [Source: ICIS news]
LONDON (ICIS News)--A new German biodiesel tax to be implemented in August could have detrimental effects on future margins, delay projects and reduce investments in new plants, market sources said on Thursday.
At the end of June, the German government said a tax of €0.09/litre on pure biodiesel (B100) and a tax of €0.15/litre on biodiesel as an additive (B5) was necessary as it could not afford the significant tax losses which would occur as end-users swapped from using regular diesel to biodiesel in their vehicles.
Several market players have said they were keeping away from the spot market as they wait for the new legislation to come into action. This has lead to a €20-40/tonne drop in biodiesel prices from mid-June to €730-780/tonne this week, according to global chemical market intelligence service ICIS Pricing.
Although demand remained strong, long-term contracts covering the second half of this year have also had margins squeezed due to uncertainty over how the new taxes would affect end-user buying interest, sources said.
Several biodiesel producers said they were even having doubts about increasing capacity at their plants this year and into 2007, adding that the upcoming taxes would be likely to reduce future investment in plants.
However, for many it was too late to halt the construction or capacity enlargement of plants, so it was likely that planned new projects would go ahead regardless.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections