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.
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Biodiesel: Market overview
Updated to Q3 2018
Supply is expected to still increase as PME biodiesel producers in Indonesia and Malaysia continue to try and meet increased buying interest from Asian importers. Market sources said most deals have already been transacted and feedstock prices are also rising, cutting into margins. Any increase in domestic blending mandate requirements could also lead to higher supply.
The EU market is uncertain as stocks are deemed to be high amid thin appetite for imports. The US has also imposed ADDs on Indonesian biodiesel. Demand from India and China could taper off as crude oil prices and gasoil prices decline and domestic consumption in southeast Asia is still largely driven by regulation.
Availability of RME is generally lower in the third quarter, compounded this year by several production cuts. This may improve sooner than originally anticipated, however, due to a drop in imports into the region. Lower imports are expected to push up the volume of RME produced, with players anticipating healthier levels of RME supply by the end of the third quarter.
RME demand is expected to remain seasonally low in the third quarter, though some buying interest is anticipated in order to blend with large volumes of PME set to enter Europe from Indonesia. Fatty acid methyl ester 0 (FAME 0) buying interest is typically at its peak at the beginning of quarter three, tapering off towards quarter four.
Biodiesel production is expected to increase, despite limited demand. Producers are hopeful after the Environmental Protection Agency (EPA) proposed a blending increase in the biomass-based diesel category under the Renewable Fuel Standard (RFS). EPA’s granting of retroactive small refinery hardship exemptions undercut prior year volumes and could still have a negative impact on production.
With no certainty regarding the retroactive blending waivers for various US refiners, buyers have limited interest in forward purchases. The political environment for getting the $1/gal tax credit extended is getting more difficult and biodiesel lobbyists will continue pushing on the extension of the tax credit for blenders, but uncertainty remains.
Ongoing biodiesel trade wars will continue during the third quarter as a multi-tiered trade fight continues to rage for Argentine biodiesel sector. September will be a key month as the European Commission (EC) will decide if it reinstates import tariffs on biodiesel from Argentina which could force Argentine producers to slow production.
Ongoing biodiesel trade wars will likely push down demand for exports. European demand will possibly disappear as they retroactively impose tariffs on Argentine biodiesel imports in September. Argentine producers will have to look to open new export markets globally to offload volume and also increase domestic blending volumes and consumption.
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).