Biodiesel Prices, markets & analysis
ICIS' Global Biodiesel price report contains news and analysis of market movements around the world. Our price assessments focus on European spot, South America, North America domestic and Asia spot.
The commentary highlights the influencing factors driving prices, and includes feedstock prices and graphs to reflect changing prices in this weekly report. Whether you are directly buying or selling on the biodiesel or related markets, this informative report will help you to make confident business decisions.
Our editor gives their expert view
Biodiesel Overview Transcript
In the US biodiesel is an emerging market. It was reduced to about 10% of its production capacity, as the Federal tax credit disappeared and has now reappeared.
With the reappearance of that, biodiesel is beginning to find its footing in the US market.
The material is highly dependent on the crude oil markets, it’s traded at a premium to heating oil, the spread on heating oil sets the prices for biodiesel that is, being looked at for basis on trading on spot market. There are no contracts in the US biodiesel markets at this time.
The market is also dependent on the crude-glycerine co-product and that material is also watched very closely for its availability for sales.
Most of the biodiesel in the US right now is traded at a premium, a spread to heating oil. The heating oil market, that has been the most successful area for domestic biodiesel sales as a blendstock it’s still finding its feet. It’s coming back into viability on the back of a reinstatement of the Federal tax credit $1/gal blender credit.
It’ll offer the players in the market more opportunity to find domestic sales for the product.
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Biodiesel: Market overview
Updated to Q1 2016
In Europe, producers began to cut their rapeseed methyl ester (RME) output at the start of December 2015 as a result of poor margins, and this scenario continues in the first quarter amid weak ICE gasoil values. This could mean the European market experiences tighter supply of RME during the first quarter unless margins improve. However, demand is not expected to improve significantly during the three months to March.
The highly politicised US biodiesel industry looks positive going into the new year amid rising federally mandated blend volumes and approval of the $1/gal federal tax credit. The industry once again finds itself moving into a new year on political precepts rather than a solid supply/demand-driven market. The tax package includes a two-year retroactive extension of the $1/gal biodiesel and renewable diesel blenders tax credit. The biodiesel blenders tax credit will be retroactive to 1 January 2015 and in effect through 31 December 2016. The US Environmental Protection Agency (EPA) released its final rule for renewable volume obligations (RVO) under the renewable fuel standard on 30 November and the figures for biomass-based diesel are higher than the proposed level released in May.
In Southeast Asia, the Indonesian government confirmed late last year that the country will be moving to B20 in 2016, making it mandatory for vehicles to use fuels with a 20% biodiesel and 80% petroleum diesel blend.
In addition, Malaysia and Thailand have also been trying to increase their biodiesel blending, although market participants in Thailand said that it is unlikely that the country will move to B10 in the near future owing to strong resistance from the automotive industry due to concerns over potential engine performance and damage.
News & analysis
Biodiesel news & analysis
ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
Our in-depth market knowledge drives our specialist focus, as we recognise the importance of individual market dynamics and not a one-size-fits-all approach.
Over 25 years of reporting on key chemicals markets, including Biodiesel, has brought global recognition of our methodology as being unbiased, authoritative and rigorous in preserving our editorial integrity. Our global network of reporters in Houston, London, Singapore, Shanghai, Guangzhou, Mumbai, Perth and Moscow ensures unrivalled coverage of established and emerging markets.
Biodiesel is a clean burning alternative fuel, produced from renewable resources. The most commonly used feedstocks are rapeseed, soy and palm oil. Corn and tallow are also used. Rapeseed methyl ester (RME) is mainly produced in Europe; soy methyl ester (SME) comes mainly from the Americas; and palm methyl ester (PME) from Asia, in particular Malaysia and Indonesia.
Biodiesel is made through a chemical process called transesterification to make the methyl ester with glycerine and is produced as a by-product.
Biodiesel can be used in compression-ignition (diesel) engines and most oil-fired boilers. It is suitable for most applications where regular diesel is currently used. It can also be used in most modern diesel engines without modification, including those in passenger cars, sport utility vehicles, light trucks, buses, ships, trains, off-road heavy equipment and mining equipment, as well as for home heating fuel, power generation and in two-stroke engines (as a mixing agent).