Oscillations in Supply/Demand Equilibrium Hampers Global Biodiesel Prices

Hamburg, Germany- With the week ending on 22nd Dec, the Biodiesel market experienced a decline in prices, primarily influenced by the downward trend in feedstock prices, including Used Cooking Oil, Rapeseed, and Soybean Oil. Factors such as reduced demand in the downstream market and higher production of feedstock by major producers played a role in driving prices lower. The overall demand from major importers in the European market, especially neighbouring countries, remained subdued, contributing to the downward price trajectory observed this week. Despite limited importing activities from the Asian market due to disputes over countervailing duties, prices failed to show positive momentum, highlighting an imbalance in the supply and demand dynamics.

The price of the Biodiesel in the European Market has declines by 9.20% this week. The European Union countries has begun an anti-dumping investigation into Biodiesel imports from China, which the bloc's industry says has slashed domestic production. The commencement of the anti-dumping probe follows a formal complaint filed by Biodiesel producers within the European Union. These producers have presented evidence indicating that Biodiesel imports from China are entering the EU market at prices artificially set low. According to their claim, these imported goods are causing significant harm to their industry, as local producers find it extremely challenging to compete in the face of such substantially lower prices. The complaint underscores the detrimental impact on the EU Biodiesel sector, emphasizing the industry's inability to withstand the intense competition posed by the remarkably low prices of Chinese imports. While a major feedstock in the European market for the Biodiesel majorly Rapeseed Oil, continued to follow declining trend thereby affecting the production cost for the Biodiesel for local manufacturers.

In both the US and Brazil, which collectively account for approximately 30% of global Biodiesel production, soybean oil stands out as the predominant feedstock. The choice by Brazil's energy policy council to expedite the mandatory blending of Biodiesel in diesel, surpassing previously set targets for early next year, has led to an increase in the cost of the primary feedstock, particularly affecting Palm Oil prices in the Southeast Asian market. This led to the stability in the price of the Biodiesel in the respective region from past 2 weeks. The stability in Biodiesel prices is attributed to the trading price nearing a support zone, prompting active participation from bidders in amassing inventories. Additionally, the recent claim by Yemen's Houthis of responsibility for targeting a Norwegian commercial tanker has disrupted the overall supply chain that further fuelled the surge in Biodiesel prices this week.

According to the ChemAnalyst's analysis, the price trajectory for Biodiesel is anticipated to remain stable to bearish. This projection is grounded in the current sideways movement observed in feedstock prices, with uncertainty prevailing regarding any pronounced upward or downward shifts. A pivotal factor shaping the Biodiesel market in the upcoming sessions is the geopolitical tension between the European Union and China regarding the dumping effect. The ongoing downward trend, signaling short build-up activities in Biodiesel prices since September, continues unabated where suppliers are exhibiting a lack of active participation in fresh bidding for Biodiesel, further influencing the prevailing market trend.