The prices of Biodiesel remained stable during the week ending 17th January 2025, following a decline in the previous week. This stability reflects a balanced adjustment to bearish market sentiment, driven by steady supply-demand dynamics and consistent Biodiesel flow in the market. The absence of sudden feedstock availability issues or notable demand shifts further supported price stability.

Key factors contributing to this equilibrium include consistent demand across various sectors, unaffected by ongoing policy uncertainties, and effective inventory management by market participants. Producers maintained adequate production levels to meet current demand, fostering optimism while avoiding significant market disruptions.

Despite this stability, the Biodiesel market faces significant uncertainties due to the transition to a new government and pending changes in policies. Production halts at major Biodiesel plants, coupled with the expiration of the “Blenders Tax Credit” on 31st December 2024, have created a risk of price surges if demand increases. The new 45Z clean production tax, intended to replace the expired system, was expected to take effect on 1st January 2025. However, delays by the U.S. Treasury Department in finalizing rules for producer eligibility have paralyzed the industry, making it difficult for producers to price feedstocks and finished products.

On the supply side, the soyabean oil prices continued to increase in the month of December 2024 which put upward pressure on the prices of Biodiesel. The soyabean oil futures rose in the week reflecting the dire market conditions for the producers. However, the steady pace of Biodiesel production and consistent inventory management have offset upward pressure on prices. Despite increasing soybean oil futures, producers have leveraged existing stocks to maintain supply levels and avoid price hikes.

The U.S. Energy Information Administration (EIA) projects that Biodiesel production will remain steady at an average of 110,000 barrels per day in 2024 and 2025, reflecting consistent output levels supported by stable domestic demand and supply dynamics. However, the agency forecasts a decline in production to 100,000 barrels per day by 2026, signalling potential challenges that could impact the industry's growth trajectory.

Net imports of Biodiesel are expected to average 10,000 barrels per day in 2024, a figure unchanged from the EIA's December Short-Term Energy Outlook (STEO). On the other hand, the EIA predicts a sharp drop in Biodiesel exports, which are projected to fall to nearly zero barrels per day in 2025 and 2026.

In summary, the Biodiesel market has remained stable due to consistent demand, effective inventory management, and steady production levels. While policy uncertainties pose challenges, the industry’s resilience and strategic planning have mitigated significant price fluctuations, ensuring stability in the near term.