Asian Biodiesel Prices Show Declining Trend, European Market Observe Bullishness

Biodiesel prices are presently exhibiting a divergent trend, characterized by a decrease in the APAC region attributed to subdued demand and heightened palm oil production. Conversely, in the European region, prices have surged owing to increased demand from importing nations. This dichotomy reflects varying market dynamics across regions, with factors such as demand-supply imbalances and regional economic conditions influencing price movements.

In the APAC market, the prices of soybean oil and palm oil initially rose. External soybean futures supported the soybean oil market, which in turn boosted palm oil prices. However, due to the increased production cycle of Malaysian palm oil, soybean oil and palm oil experienced a pullback after the initial rise. During the week ending on May 25th, prices in China saw a slight decline of nearly 0.5%. The markets for soybean oil and palm oil are fluctuating, with overall production increased. An ample import of rapeseed is expected from May to August, and the supply of rapeseed oil is anticipated to remain loose. Oil demand is currently in its off-season, leading to limited market demand. The decrease in palm oil prices has resulted in lower downstream Biodiesel prices.

The decreased demand from the Biodiesel and transportation sectors has also contributed to the price decline. Palm oil experienced a significant increase due to seasonal factors, as demand typically rises during the summer months. However, the demand for terminal oil consumption has weakened, and with Malaysia in a production cycle, this has put pressure on future price increases for soybean oil and palm oil. The balance between high production and inventory levels, along with fluctuating demand, has contributed to the decline in Biodiesel prices.

In the European market, Biodiesel prices have risen by 2.9% in the Dutch market, increasing from USD 1020/MT to USD 1050/MT. This rise was primarily driven by an uptick in the upstream market for rapeseed oil, a critical feedstock for Biodiesel production. Europe, which accounts for over 60% of the global production of rapeseed oil used in biofuel manufacturing, saw increased consumption of rapeseed oil for Biodiesel production. This heightened demand stimulated growth in the rapeseed oil market, further supporting Biodiesel prices. In a significant development, European Biodiesel producer Argent Energy initiated consultations about potentially halting production at its Biodiesel plant in Motherwell, Scotland. Despite commendable efforts from the team, external factors affecting the UK and EU Biodiesel market necessitated a strategic shift.

The Netherlands, particularly Rotterdam, maintained its crucial role as a global biofuel trade hub, serving as the primary trading partner for Biodiesel. Notably, Biodiesel exports to the US saw a remarkable increase of 55%, reaching 444,100 tonnes, making the US the second most significant destination for Biodiesel exports. Conversely, deliveries to Belgium experienced a notable decline, with the largest quantities originating from the Netherlands, Belgium, Malaysia, and Austria. The decline in imports from Belgium was particularly noticeable, possibly due to fraudulent imports from China being routed through Rotterdam. The European and UK Biodiesel production sectors have faced significant challenges, including intensified competition from imported Chinese Biodiesel, which benefits from state economic support and subsidies. These external conditions have substantially weakened the environment for Biodiesel production in Europe and the UK, necessitating strategic adjustments to navigate the evolving market landscape.

According to ChemAnalyst, the recent rise in Biodiesel prices may not be sustainable, as the increase occurred at a decreasing rate. Oil factories have made good profits from processing, with a rise in domestic purchases of ships. From May to August, there has been enough imported rapeseed in China. In May, the number of imported soybeans in China increased, and as the main palm oil-producing countries enter a period of heightened production, it is expected that the likelihood of weak fluctuations in rapeseed oil prices will increase.