New biodiesel rules put US industry at risk

HOUSTON (ICIS news)--New industry standards could sound the death knell for many US biodiesel producers, sources said on Monday.

The American Society of Testing Materials (ASTM), the Pennsylvania-based group that sets US fuel specifications, said it will release as early as 13 October revised quality standards for the renewable fuel.

Producers have fought against the new standards, saying the new testing process was overly stringent. Companies that could not afford the new hardware necessary to meet the revised specifications could go bankrupt, sources said.

“It’s going to be crippling, and I mean crippling. Typically, the way the test has to be performed, you may run a test out of one tank that will pass and second test from the same tank that won’t,” a producer said.

An ASTM representative could not be reached to discuss the changes.

PME manufacturers will be especially hard hit, sources said. The palm oil-derived fuel congeals at higher temperatures than other forms of biodiesel and won’t meet the new cold flow plug point (cfpp) requirements.

“If the new rules come out Monday, there’ll be a lot of people out of business on Monday. It’ll affect a lot of producers, even some of the soy guys who don’t have the right blends,” one US palm methyl ester (PME) producer said.

An oversupplied Asian market has brought PME prices down by more than $100/tonne (€73/tonne) from the month before, with prices assessed on Thursday at $800-850/tonne FOB (free on board) southeast Asia, according to global chemical market intelligence service ICIS pricing.

But one trader said the new ASTM standards will effectively block even lower-priced material from entering the US market since buyers will be unable to use it.

“PME is not going to play. The market there is falling, and no one wants to catch a falling knife. You’d be stuck with a biodiesel that no one wants to buy,” the trader said. 

($1 = €0.73)

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
For more information on biodiesel, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect

ICIS Copyright © Reed Business Information 2009

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 27 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.