US biodiesel tax credit delay sparks price rise concerns

30 December 2009 11:27  [Source: ICIS news]

SINGAPORE (ICIS news)--The delay in renewing the current one dollar per gallon tax credit issued to biodiesel producers by the US Senate has sparked concerns amongst industry players over a potential price drop, Southeast Asian buyers and sellers said on Wednesday.

"No one expected Congress to forget about the US blending credit which is worth $300/tonne (€209/tonne) and is expected to have a huge impact on biodiesel," a key biofuels producer in Southeast Asia said.

There was a general consensus in the region that global biodiesel prices were likely to fall in the coming years as producers would need to sell off existing inventory to maintain healthy cash flows should this tax credit not be renewed soon.

"This is also likely to affect feedstock palm methyl ester (PME) market producers as the blending credits can help lower the costs of methyl ester (ME)," a Singapore-based PME trader said.

PME was reportedly traded at $850-880/tonne FOB (free on board) SE Asia on Wednesday, up $30-40/tonne from last week, according to data from global chemical market intelligence service ICIS pricing.

ICIS news earlier reported that the US Congress was likely to discuss extending the biodiesel credits next month.

($1 = €0.70)


For more on biodiesel visit ICIS chemical intelligence 

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By: Serena Seng

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