Europe’s RME biodiesel market flips into contango

11 July 2007 12:16  [Source: ICIS news]

LONDON (ICIS news)--The Europe rapeseed methyl ester (RME) biodiesel market has moved into contango as product traded at up to $100/tonne higher for 2008 than July and August offers, market sources said on Wednesday.

 

Biodiesel buyers and sellers anticipated an upturn in demand for RME at the end of the year, due to the product’s strong cold properties. This has led to the forward purchasing of material in the winter at significantly higher prices than those currently seen in the market.

 

RME has a cold filter plugging point (cfpp) temperature of -15 degrees Celsius, making it the most valuable type of biodiesel for the winter, especially in parts of northern and eastern Europe.

 

Offers for July and August RME were reported at $910-920/tonne FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp), while those for the first quarter of 2008 were closer to $1,000/tonne FOB ARA.

 

Further ahead still, deals were heard to be taking place at $1,010/tonne FOB ARA and above in second and third quarter of 2008, according to global chemical intelligence service ICIS pricing.

 

Europe biodiesel producers include Biofuels Corp, Oleon and Biopetrol Industries.

 

A contango takes place where prices for a material are higher for forward months than in the near term and encourages traders to store the product for sale later.

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Author: Nicolette Allen
+44 20 8652 3214

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