03 August 2006 12:07 [Source: ICIS news]LONDON (ICIS news)--Biodiesel prices are beginning to fall in the aftermath of new German tax legislation which was implemented on 1 August, market sources said on Thursday.
After the changes came into force, a previous rush in purchasing slowed and prices for pure rapeseed methyl ester (RME) biodiesel slipped this week by €10-20/cbm to €670-730/cbm (€760-830/tonne) free on board (FOB) Northwest Europe (NWE), biodiesel producers and traders said.
Prices had risen sharply last week by €40-60/cbm to €680-750/cbm (€770-850/tonne), according to global market intelligence service, ICIS Pricing.
Traders said the rises came on the back of higher feedstock costs, as well as a surge in buying interest in Germany before the tax incentives were cut.
Market sources are concerned that producers may be forced to continue to accept lower prices as buying interest from end-users is hit by the change in legislation.
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.
Germany is Europe’s leading biodiesel producer, where a national capacity of 3m tonnes of biodiesel is expected to be onstream by the end of 2006.
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