Europe biodiesel awaits gasoil, legislative boost

12 November 2008 15:06  [Source: ICIS news]

LONDON (ICIS news)--Europe biodiesel remains paralysed by uncertainty this week on the threat of changes to legislation and tumbling gasoil prices, said sources on Wednesday, with one broker describing the market as "officially dead".

“Until they sort out the tax and legislation we might as well all go home,” the broker added.

Buyers appear to be covered for the rest of this year, with very few numbers in the market and little interest in prices for 2009.

“The uncertainty regarding sustainability laws and import duties means that no-one is rushing to look at first-quarter prices at this point,” said a UK biodiesel producer.

“If the flow of cheap product from the US is stopped then we could be in line for a major price correction, boosting prices to a point where it is economical for the European plants to run.”

While producers are unified in their desire for an end to cheap US imports flooding the EU market, many admitted that this would not be the end of their worries.

“FAME blend prices are collapsing with mineral oil and the vegetable oil market is quite strong,” said a producer, “which means that our margins, which were bad, are now terrible.”

Fatty acid methyl ester (FAME) -5, which was pegged at $1,450-1,500/tonne FOB (free on board) Rotterdam in mid-August when gasoil was trading at a high of around $1,067/tonne FOB ARA (Amsterdam Rotterdam Antwerp) was assessed at $820-830/tonne FOB Rdam.

November gasoil was at $605/tonne FOB Rdam, according to global chemical market intelligence service ICIS pricing. FAME -5 Is less volatile and considered a good indicator of biodiesel pricing trends.

It was agreed by market participants that biodiesel would not be an economically viable product without some government intervention unless a major downwards correction took place on vegetable oil prices or technological innovations reduced production costs.

($1 = €0.80)

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

Email nadine.spoeri@icis.com to find out more about the enhanced US and European biofuel reports
To discuss issues facing the chemical industry go to ICIS connect

By: Rachel Howat
+44 20 8652 3214

< previous article(VIDEO - ICIS news Asia Lunchtime Bulletin 29 October 2009)

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