Biodiesel

The European biodiesel market continues to be hindered by legislative uncertainty, as participants are no closer to knowing which grades and feedstocks will count towards the European Renewable Energy Directive (RED) targets this year. Rapeseed methyl ester (RME) production remains at lower levels than previous years. However, there is some optimism that local capacity will increase if the European Commission rules that biodiesel imports from Argentina and Indonesia were sold in the EU at below cost price.

In Latin America, Argentina’s tax hike on biodiesel exports and lowering of domestic prices, in a move to make domestic fuel prices more affordable, has undermined the viability of the biodiesel industry, and many small and medium-sized producers have idled production. Biodiesel exports from Argentina to Europe have largely come to a halt, following an anti-dumping complaint filed with the EU.

The main focus for players in the US market has been the fate of the reinstatement of the biodiesel tax incentive, as well as concern over Renewable Identification Number (RIN) fraud. The American sector has been anxious to reinstate the $1 per gallon biodiesel tax incentive that expired on 31 December 2011. Most biodiesel producers consider the future of that incentive to be critical. Furthermore, RIN fraud issues have diminished RIN trading activity and values during the year.

In Asia, exports of palm methyl ester (PME) to Europe will continue to be low compared with levels seen in previous years, because of a slowdown in demand of gasoil sales as a result of economic uncertainty. The majority of the exports originate from Indonesia, which is currently under EU investigation for an anti-dumping charge.

Updated to mid-February 2013