US biodiesel is still years away from NYMEX

09 February 2010 20:46  [Source: ICIS news]

GRAPEVINE, Texas (ICIS news)--The US biodiesel industry will have to standardise its fuels before buyers and suppliers can expect to see the product listed as a commodity on the NYMEX, sources said on Tuesday.

Unlike ethanol, prices for biomass-based diesel are not listed in any of the big commodity boards in the US, allowing the market little transparency. The renewable fuel will not be considered ready for commoditisation until there is some sort of standardisation put to all the different grades of the fuel, whether they are made from soybeans, waste grease or animal fat, source said. 

Speaking on the sidelines of the 2010 National Biodiesel Conference, Morgan Stanley Vice President John Cusick said what will most likely be used is a scale of cold filter plug point (cfpp) or the temperature point that the fuel will start to congeal.

The system, which is labelled in degrees Celsius, is used by ICIS pricing to organise its Europe fatty acid methyl esters (FAME) biodiesel values. 

"I know a lot of guys will say, 'Celsius?! That's not even American'," Cusick said of cfpp. "But that will probably be how it goes."  

Mike Reed, an analyst at Northville Product Services, said the market will also have to eventually decide on a standard shipping system for biodiesel.

"You need a delivery point for a physical barrel of the stuff," Reed said. "For ethanol, it's Chicago."

Biodiesel in the US ships from the US Gulf, the midwest and the east coast, allowing for a plethora of shipping fees, he said. 

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By: Ben Lefebvre
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