Planned US biodiesel capacity sputters on margins

06 September 2007 22:13  [Source: ICIS news]

By Judith Taylor

AUSTIN, Texas (ICIS news)--New US biodiesel production capacity scheduled for start-up through 2008 may not make it, according to industry sources speaking on the sidelines of the Biodiesel Coalition of Texas (BCOT) conference in Austin on Thursday.

"Poor margins are making start-ups questionable," one source said.

According to the National Biodiesel Board, 148 companies were making biodiesel with a production capacity of 1.39bn gal/year.

The board said 96 companies have reported that their plants were under construction and were to be completed within the next 18 months. An additional five plants were expanding their existing operations. Their combined capacity, if realised, would result in another 1.89bn gal/year of biodiesel production.

From the agriculture producers' view, the higher prices now fetched for crude soybean oil could look attractive, a market participant said. 

"Soybeans could bring as much as $2/acre," an agro-player said.

Another participant said $2/acre soybean prices would result in refined soybean oil prices over the 50 cents/lb ($1,102/tonne) mark. Those prices aren't here yet, but many attendees at the BCOT conference thought such levels could surface.

The biodiesel market "might look good to some now, but in the long run high fossil energy costs could result in less biodiesel feedstock oils being produced in the United States," an agro-based speaker said.

(Additional reporting by Brian Ford)

By: Judith Taylor
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