D4s Break, BOGO Crashes, ARAG Wobbles: Biofuels Enter Q4 in Crisis Mode

As the October 14th implementation date for USTR Section 301 shipping regulations nears, the maritime industry braces for a seismic shift in cost structures. New fees of up to $700k per vessel for Chinese-owned or operated tonnage entering U.S. ports will not directly hit American exports thanks to exemptions for empty loadings, but the indirect effects could be profound. Vessel owners are already repositioning fleets, with concerns over reduced availability pushing freight rates higher. The net result may be an erosion of U.S. export competitiveness, particularly for petroleum and oilseed cargoes, as Chinese carriers rethink U.S. port calls.

In the U.S., soybeans and oilseeds remain under pressure. Soybean oil has been trying to round out support around the low-50 cent/lb mark, but the complex is weighed down by contango in spreads and lack of fresh Chinese demand. Biodiesel producers remain squeezed, with the screen crush margin still 45–50 cents per gallon negative. The signal from compliance markets is even darker: D4 RINs collapsed under $1, reflecting both structurally weak blending economics and fading confidence in mandate enforcement. The industry is in limbo awaiting clarity on EPA reallocation rules, leaving oilseed markets vulnerable to further downside.

D4 RINs

Europe’s ARAG window has shown more resilience in flat price, but the cracks are widening fast. FAME traded at $1,280/mt fp, RME at $1,414/mt fp, and UCOME at $1,502/mt fp. Premiums fixed today at +685 over ICE gasoil for FAME, +727 for RME, and +777 for UCOME — a sharp retreat from recent highs. The collapse in BOGO, down more than 5% today and now sliding into the low 400s, is the clearest warning signal yet. With that spread breaking lower, biodiesel premiums in ARAG are unlikely to hold, and UCOME’s sharp pullback may already be the leading edge of a broader correction. Gross margins remain positive for now, but the trajectory is turning bearish as the soy complex sets the tone.

In Asia, political turmoil in Indonesia is no longer just background noise but a direct fight over government budget allocations. The levy funds that subsidize B35/B40 biodiesel blending are at risk of being diverted or delayed, making it inevitable that biodiesel consumption will be scaled back. This would diminish Indonesia’s role as a key absorber of palm oil, freeing up volumes for export and potentially stabilizing BOPO. Yet at this moment, it is the soy complex that is "trumping" everything: deep contango, collapsing spreads, and persistent negative biodiesel screen crush margins are driving BOPO below $50/mt despite the potential relief from palm.

Bean Oil/Palm Oil (BOPO)

At the same time, SAF markets in Asia remain structurally oversupplied, with most output still flowing to Europe where mandates support demand. China has been explicit in its ambition to become the world’s leading SAF supplier, using this surplus as both a commercial wedge and a geopolitical lever. With Chinese UCO prices at three-year highs and regional feedstock bottlenecks intensifying, the surplus is as much about strategy as about economics. Taken together, USTR tariffs, collapsing European premiums, Indonesian levy infighting, D4s under $1, and Asia’s SAF overhang form a complex web of risks for biofuels. Policy, politics, and pricing are colliding across regions, leaving Q4 set up as one of the most volatile trading environments in recent memory.