Higher Europe RME premiums after Argentina biodiesel tax hike

16 August 2012 16:58  [Source: ICIS news]

LONDON (ICIS)--Argentina's increase in export tax for domestic biodiesel has resulted in higher rapeseed methyl ester (RME) premiums over ICE gasoil in Europe, sources said on Thursday.

According to ICIS data, soybean methyl ester (SME) premiums increased by $45–50/tonne this week, to $245–250/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp), as a result of the export tax increasing from 20% to 32%.

RME premiums have also firmed, by $40–50/tonne this week, to $300–310/tonne FOB (free on board) NWE (northwest Europe), because of higher levels of buying interest.

RME demand has increased because buyers are concerned that further rises in SME premiums are imminent, and are purchasing RME instead.

“It’s early days but Argentina’s decision to increase the export tax on SME has increased demand for RME,” a broker said.

Operating rates for RME have decreased as a result of lower production margins, caused by competition from imports and used cooking oil methyl ester (UCOME), which counts double towards biodiesel blending targets as it is produced from waste.

It is thought the resurgence in buying interest for RME could put pressure on supply, especially as the fourth quarter approaches, as it is the peak demand season for RME.

“With RME production rates at low levels and buyers looking to fill contracts, it is certainly worth watching RME in the coming weeks,” the broker added.

($1 = €0.81)

By: Sarah Trinder
+44 20 8652 3214

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