UK Drops the Hammer on US Renewable Diesel Imports as Gasoil Tightens Again

Vegetable oils closed the week firmer, though with different signals across forward curves. Palm oil futures for the 2026 strip climbed back above 1,000, with the front months up $21–24 (+2.0–2.4%) despite remaining 2.5–5% below levels from three months ago. Bean oil followed, with ZLZ5 at 51.8 cents (+1.75%) and about +0.9 to +1.0 cents across the curve. Structure widened slightly, with ZLZ5/ZLH26 at –0.79 and ZLZ5/ZLK26 at –1.08. BOPO eased to roughly +145 but remains more than 35% above its level three months ago — a sign of continued vegoil outperformance relative to middle distillates.

In Northwest Europe, the ARAG barge window stayed active. RME indications near $758/mt imply a flat price around $1,440/mt with ICE gasoil at $685.75/mt. FAME 0 fixed at $610/mt, giving a flat price just under $1,300/mt. UCOME at $795/mt delivered a flat price near $1,476.50/mt — roughly $180/mt above FAME. HVO Class 2 at $1,400/mt translated to a flat price of about $2,533/mt, keeping the enormous $1,050/mt HVO–UCOME flat-price premium intact. After today’s UK trade action, the most likely adjustment in ARAG is higher UCOME, not lower HVO.

The UK Trade Remedies Authority confirmed it will impose countervailing duties of £257.80–£303.56/t ($341–$402/t) on all US renewable diesel imports starting March 2026 for five years, while explicitly exempting SAF. Roughly 83 million gallons per year — about 7 million gallons or 20,000 tonnes per month — of US renewable diesel currently entering the UK will be priced out overnight. The anti-dumping investigation was terminated; the UK is targeting subsidies only.

Three US exporters were individually identified: Phillips 66, St. Bernard Renewables, and Diamond Green Diesel (Valero/Darling), with duties ranging from £257.80 to £265.82/t. All other US exporters are assigned the maximum £303.56/t rate, ensuring that all US-origin HVO is economically shut out of the UK market.

The immediate biodiesel implication is in Europe. UK biodiesel production had collapsed to a quarter of consumption as subsidized US and Chinese RD displaced domestic output. With the UK door now slamming shut on US HVO, UK and EU producers regain pricing power, and UK buyers must pivot back toward domestic supply and EU imports. This is structurally bullish for UCOME in ARAG, which had been suppressed earlier by subsidized US flows into the UK that eroded waste-based margins. That suppression now ends.

Beyond Europe, this decision pushes the United States deeper into becoming a renewable diesel island — with nearly 4 billion gallons of capacity, shrinking export destinations, and an oversupply that must increasingly clear internally via RINs rather than export markets. EU access vanished years ago; now the UK is off-limits; and Canada and Australia are reviewing similar actions.

And this “RD island” dynamic is not only bad for US HVO producers — it’s also bad for US biodiesel producers. With 20,000 t/month of stranded HVO now forced back into the domestic system, more renewable diesel barrels will chase the same compliance demand pool. Obligated parties overwhelmingly prefer HVO to FAME for blendability, logistics, and cold-flow reasons, meaning conventional biodiesel will face heavier competitive pressure, weaker B100 sales, and further margin compression. The UK shutting off this export outlet tightens the squeeze on biodiesel plants already struggling with feedstock costs and flat RIN economics. This raises the risk of further US biodiesel idling over the next 12–18 months.

You could see that tightening reflected immediately in RINs. D4 RINs rallied again, with Dec ’25 around 1.073 and Dec ’26 near 1.166, steepening the forward curve as traders price risk without EPA guidance. The Irwin & Hubbs framework explains why: the D4 RIN bank peaks in 2024 and begins draining rapidly into 2027 just as revised RVOs sharply increase feedstock demand. They estimate total feedstock demand rising 19% in 2026 and 48% in 2027, with domestic feedstock demand rising 63% in 2026 and 113% in 2027 to 48.8 billion pounds (22.1 Mil MT)— about 61% of total US availability. With domestic production near full utilization by 2027 and RIN stocks approaching minimum safe levels, the system moves toward a tight, high-volatility chokepoint.

But traders are mindful of the regulatory ceiling: this administration becomes uncomfortable when RIN prices rise, because elevated RINs invariably trigger surges in Small Refinery Exemption petitions and aggressive lobbying from independent refiners. This pushback risk limits how far the D4 curve can run unchecked until EPA issues guidance.

Meanwhile, ICE gasoil reinforced the tight fundamentals. Front-month gasoil settled at $685.75/mt, and the Dec/Apr backwardation snapped back to +43.25/mt, a winter/shoulder spread that discourages storage and keeps inventories tight. That structure remains the key macro pillar supporting biodiesel and HVO flat prices.

As the week closes, the market is digesting a large structural shift: vegoils are firmer; gasoil is tight again; the UK has sealed off a major outlet for US HVO; domestic biodiesel faces heavier competition; forward RINs are repricing a 2027 choke point; and ARAG’s HVO/UCOME spread remains above $1,050/mt just as UCOME regains its pricing power. With 20,000 t/month of subsidized US renewable diesel removed from the UK, UCOME in ARAG is set to move higher.