Feedstock issues slam US biodiesel - suppliers

28 April 2008 22:56  [Source: ICIS news]

HOUSTON (ICIS news)--Feedstock issues continue to slam biodiesel profitability, several US suppliers said on Monday.

“We’re able to use multi-feeds, but straight soy-based plants are having a lot of trouble,” one producer said.

Biodiesel can be made with soybean oil, palm oil, or other fats and oils, according to sources. In the early rush to build plants, many producers chose to take a single-feedstock approach and use soybean oil. A few elected to take vegetable oils only, using either soybean oil or palm or canola oil and sometimes a blend of several.

As the US biodiesel industry formed, some producers chose to take a multi-feedstock approach in building plants, and these suppliers are weathering the slam better than those on single feedstocks, particularly plants trying to maintain operations using only soybean oil, suppliers said.

Using multi-feeds allows production from fats and greases as well as from vegetable oils. The resulting biodiesel is typically called fatty acid methyl ester (FAME), as opposed to the soy methyl esters (SME) made using bean oil.

The multi-feed option offers a cost advantage in today’s high-priced soybean oil market, where crude soybean oil prices have topped 60 cents/lb ($1,323/tonne or €847/tonne) in recent weeks.

Yellow grease and recycled restaurant grease, as well as poultry fats, are being utilised to off-set the feedstock cost barriers in keeping plants operating, suppliers said.

Although yellow grease prices are near 40 cents/lb, about double last year’s prices according to some market sources, they are well below price levels for soybean oil.

Front-month May soybean oil futures on the Chicago Board of Trade (CBOT) on Monday settled down 1.22 cents from the 58.97 cents/lb previous finish, keeping the cost prohibitively above the generally accepted viable margin breakpoint cost of 45 cents/lb, biodiesel producers said. 

Major US biodiesel producers include Peter Cremer North America, World Energy and Renewable Energy Group, among others.

($1 = €0.64)

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels

 

By: Judith Taylor
+1 713 525 2653

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.

Printer Friendly