EU finally announced the duties on Biodiesel imports from China which originally focuses on UCOME imports for which they started an investigation earlier in 2024. They have widened the scope to include HVO (Renewable Diesel) but NOT SAF (made using HVO process) that will now impact many existing producers in China with expansion projects - close to 4.5-5 mil Metric tons. What is more interesting about the announcement is the "injury margin" imposed on China. This is much beyond what anyone had expected (20%) on registered imports since last Oct 1. Therefore, all importers, who have registered imported products from these producers will now be facing much higher injury duties than expected. This will probably concern some of the bigger European importers who have imported and registered close to 50/60 Kt per month since registration began. This news has not moved NWE biodiesel markets much today as premium of +600 over ICE gasoil are now common on UCOME in Northwest Europe yielding a gross margin of $195/mt which is not that great when accounting for feedstock losses, distillation and power costs (that I estimate at least at $150/mt) . RME gross margin which is most relevant at this time is now a secure $117/mt even with the most recent rally making it the best product to prepare winter demand which is only 8 weeks away. This soft oil rally is surely overdone as Europe is still exporting significant quantities of biodiesel to US from both Spain and Germany that it can easily pull-back if there was any shortages on the continent. Surely this counter vailing duty news against China will also now release significant newly available quantities of UCO in China that will be ready for export to US and other UCOME producers in Southeast Asia and Korea. It will also reduce HVO and SAF requirements in China for Palm Olein and Palm oil effluent as many EU importers will now become very cautious on any imports from Asia with the strong EU & US theme of ongoing trade war with China. Rapeseed Oil remains the cheapest soft oil in Europe with crushers now increasingly reliant on Ukraine rapeseed imports whose oil cannot be used for biofuels on lack or doubtful traceability but this will satisfy meal demand through next season.
Comments