Europe biodiesel production improves, but challenges remain

07 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European biodiesel production capacity continues to lift ahead of the summer specification changeover; however, some legislative uncertainties still hang over the market, sources said on Thursday.

Demand is understood to be reasonable across most parts of Europe, with production said to be increasing as a result of the European Commission’s (EC) decision to register Indonesian and Argentinean biodiesel imports and the possibility of retroactive anti-dumping duties.

However, the embattled Spanish industry is not faring as well, with the Spanish Ministry of Industry, Energy and Tourism recently announcing it had lowered the biodiesel blending mandate from 7% to 4.1%.

A trader said this was creating a larger price spread between regular and Renewable Energy Directive (RED) grades as Spain purchased significant amounts of non-RED material.

Prices for rapeseed methyl ester (RME) RED were at $1,229-1,251/tonne (€946-963/tonne) FOB (free on board) NWE (northwest Europe). RME RED is maintaining a $60/tonne spread over its non-RED counterpart.

Weaker ICE gasoil values saw European biodiesel prices ease across the board this week. However, sources said lower outright prices would not stimulate extra demand.

There was also talk in the market this week about the long-term legislative issues that still threaten the European industry.

“There may have been some rumblings that the EC will back down on its proposal to cap crop-based biofuels at 5%,” a trader said.

“And we’ll just have to wait and see what they do with the indirect land use charges - that’s been an ongoing political hot potato.”

($1 = €0.77)


By: Kate Wilcock
+44 208 652 3214



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