08 November 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--Demand in the European biodiesel market remains low this week as the European Commission’s (EC) draft changes to cap crop-based biodiesel to 5% continues to be seen as a huge barrier to the industry, sources said on Thursday.
Market participants reported the spirit among biodiesel producers to be depressive as a result of the uncertain future of crop-based biodiesel.
In the physical spot market, demand remains low and a buyer said many are covered for their rapeseed methyl ester (RME) requirements for this year and most of the buying interest is for January 2013.
RME outright prices softened this week because of lower ICE gasoil values. However, premiums remained steady at $285-305/tonne (€222-238/tonne FOB (free on board) NWE (northwest Europe) and renewable energy directive (RED) product was also steady at $345-365/tonne FOB NWE.
A buyer said worried producers had been in contract looking to secure sales for next year as capacity is high and demand is decreasing.
Sources from all sides of the market said the impact of the draft legislation, if it is to proceed, would devastate the European biodiesel industry.
EC Climate Action Commissioner Connie Hedegaard said in October that the Commission was not closing down first-generation crop-based biofuels. Rather, it was sending a signal that advanced biofuels will be the only choice.
However, producers said as a result of the draft legislation, crop-based biodiesel producers are uncertain they will have enough turnover to attract investment in new technologies.
A trader said the current market sentiment is that biofuels such as algae are not viable on a commercial basis yet and there is not enough used cooking oil methyl ester (UCOME) to meet the renewable energy target.
($1 = €0.78)
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