Biodiesel approaches European and Southeast Asian market with oscillation in demand outlook

This week, Biodiesel in the European and Southeast Asian markets witnesses a fluctuating price trend with demand concern from the downstream enterprises. In the European market, the costs are showing a downward pattern because of feeble demand from its downstream agricultural equipment and power generation ventures. However, in the Southeast Asian market, the prices of Biodiesel are showcasing an upward trend influenced by cost support from its feedstock, Palm Oil market, leading to enhanced operating costs. Therefore, along with the strong demand and high purchasing appetite from the end-user, the market procurement fundamentals was high as well, resulting in an inclined price trend.

In the European market, the sharp decline in the price trend of Biodiesel was attributed to the disruption in supply/demand dynamics with supply exceeding the demand. According to merchants, the manufacturing cost among firms remains low, and reduced product bidding adds to the downward trend. Market fundamentals remain weak in the Biodiesel market because of limited product demand and bearish spot prices in the region. In Belgium, the prices of Biodiesel declined and reached USD 1920/MT (FOB-Antwerp), on 17 November, 2023. In terms of the feedstock market, the import of Vegetable Oil mainly Palm Oil has declined in the dedicated region due to a well-supplied commodity and sluggish demand outlook. The unfavorable high operation cost among the key producers led to a decrement in the overall market supply. The supply of Biodiesel remains moderate due to the decline in the import of its feedstock, Rapeseed oil amid the end of the grain export agreement and the ban by the European Union imposed on imports of Ukrainian goods have made an impact. Low output of Biodiesel is observed from China as low operational activities are observed due to the Golden Week holidays. Operating cost of Biodiesel in Germany was much higher than using Fossil fuel resources  and end users use difficult to opt for the use in the domestic Market.

In the Southeast Asian market, the Biodiesel market started to revive with improved demand and tepid market fundamentals. With rising feedstock Palm Oil prices, the market dynamics accelerated the surging prices of Biodiesel in the domestic market. With the limited supply of Biodiesel and low inventories among the ports, market dynamics fluctuated in the region. The production rate surged, and high market trading activities in the region provided cost support. Taking the strong market situation into account, traders increased their quotations to earn more profit margins. However, this market situation was unfavorable to the buyers as they were obliged to purchase Biodiesel due to the strong demand from the downstream agricultural equipment and power generation markets.

According to the ChemAnalyst, the price trend of Biodiesel is anticipated to decline in the few upcoming weeks. The bearish demand from the downstream agricultural equipment and power generation enterprises and sufficient stocks in the storage units may still prevail, continuing to downward price trajectory. Therefore, as per the requirement from the downstream markets, the production rate for Biodiesel may decline as well continuing the fluctuations in the price trend.