The European Commission's ruling that biodiesel imports from Argentina and Indonesia be subject to registration as part of its ongoing investigation into allegations that subsidised biodiesel from the two countries was dumped in Europe has meant that the flow of imports into Europe has dwindled.
As a result, the demand for rapeseed methyl ester (RME)has strengthened slightly, but production margins remain narrow. European producers are now importing increasing volumes of palm oil in order to producer palm methyl ester (PME) domestically.
Fatty acid methyl ester (FAME) 0 supply has tightened following the decrease in soybean methyl ester (SME) imports from Argentina, although it is thought that some producers are substituting SME with RME in FAME 0 blends. As a result, FAME 0 premiums have firmed.
Market demand generally remains unexceptional, although sources note increased demand for summer grades as warmer weather approaches.
In Latin America, Argentine producers have been running their plants at 50-60% capacity following a tax hike on biodiesel exports and the monthly publication of domestic prices, in a move to make domestic fuel prices more affordable.
Biodiesel exports from Argentina to Europe have largely come to a halt, following an anti-dumping complaint filed with the European Union. The government recently increased the blend rate of biodiesel temporarily from 7% to 10%. However, major producers say the production rates will not increase much, as the measure is temporary.
In the US, biodiesel production has been slow to ramp up following the reinstatement of the $1/gal federal tax incentive. Production is expected to increase steadily over the course of the year to meet the Renewable Fuels Standard (RFS) mandated production numbers.
Asian palm methyl esters (PME) trade was limited, because of the ongoing anti-dumping investigation on imports from Argentina and Indonesia by the EU.
However, 8,000-10,000 tonnes of Malaysian cargoes were exported to Europe each month this year. This was not seen in the last few years as Indonesian cargoes had always been more economically priced.
Some exports ex-Indonesia to the US were reported. Producers said these exports were largely to service deals which had been made much earlier at the end of 2012 or beginning of 2013 as the profit margins were higher when the spread between palm oil and gasoil was wider.
Updated to mid-May 2013