Tariff Ripples and Tanker Traffic: Markets Recalibrate Amid New Constraints

ICE gasoil prices dropped by $11/mt today to $630, giving a significant lift to BOGO spreads. With bean oil relatively static, the spike in BOGO reflects the gasoil weakness more than vegetable oil strength. While gasoil's May/September backwardation has softened to +$11.50, the biodiesel paper curve remains tight, with the Q2/Q3 FAME 0 spread still at +$88. Strikingly, that steep backwardation is not echoed in UCOME, which shows a much flatter +$30 curve—suggesting diverging expectations on demand or supply tightness for waste-based versus crop-based biofuels.

BOGO

In the ARAG spot barge market, trading activity today focused largely on FAME 0, which settled at $1,298/mt. UCOME, in contrast, printed at $1,443/mt, widening its premium over FAME 0 and stretching its discount to HVO CL2, which settled at $1,814/mt—a $371/mt spread. This gap continues to reinforce the value hierarchy within advanced biofuels. However, Sustainable Aviation Fuel (SAF) remains sluggish despite Europe’s mandated 2% blend rate. Pricing is indicative around $1,784/mt, but the lack of liquidity suggests policy signals are not yet translating to real market traction.

European veg oil dynamics further complicate the picture. Rapeseed oil continues to price at a premium to soybean oil—an unusual inversion signaling near-term tightness. Dutch-origin rapeseed oil holds steady at €1100/mt for April and €1085/mt for May–July, while soy oil has softened to €1075/mt for May and trends down to €1050 by August. This premium compresses RME margins, with current values around $1317/mt, while global soybean oil faces downward pressure from robust South American harvests and weak FOB premiums at Paranaguá. If Europe’s rapeseed harvest normalizes by June/July, some price relief could follow, but until then, the pressure favors alternative feedstocks like UCOME and HVO.

Adding complexity is the growing logistical fallout from USTR Section 301 enforcement. Although tariff rhetoric may be easing, HLS has canceled 80 container trips to the U.S., highlighting the tangible dislocations. China accounts for 54% of U.S. container trade, and restrictions on Chinese-owned or flagged ships will not only affect Asian imports but could ripple into outbound container availability for tallow, technical oils, and other waste-based feedstocks—some of which still move in flexitanks or specialized ISO tanks. The redirection of Asian-origin material to Europe is already visible in pricing pressure across CIF benchmarks.

On the policy front, Washington has gone quiet again, aside from granting E15 blending waivers for summer. D4 RINs ticked slightly higher to $1.067 today, but confidence in RFS enforcement continues to erode. The EPA’s extension of 2024 compliance deadlines—now without a defined endpoint—and the flood of SRE petitions reinforce a sense of regulatory apathy. That undermines planning certainty, particularly for producers evaluating 45Z credit timing.