European Biofuel Companies have welcomed the announcement on 19th of July by the European Union to apply Provisional import duties on Chinese biodiesel as a preventive measure as part of its anti-dumping (AD) investigation of Chinese biodiesel.

Starting from 16th August 2024 onwards, the European Commission will levy AD duties on Chinese HVO (hydro-treated vegetable oil) and FAME (fatty acid methyl ester) imports ranging from 12.8% to 36.4%. These measures will come to effect exactly one year after the launch of the investigation and are set to remain in place until at least February 2025.

In line with EU Energy Transition long term goals and to reduce reliance on fossil fuel in the transport sector, the European commission has encouraged the use of advanced biofuels, implementing policies that allow advanced biofuels to be double-counted towards renewable energy targets. The move has incentivised FAME and HVO use over biofuels derived from food crops.

According to the Renewable Energy Directive (RED), advanced biofuels must be produced from residues, such as sawdust or leaves, or waste materials like used cooking oil (UCO) and certain animal fats. Since 2019, imports of waste and advanced biodiesel from China have surged, making China the largest biodiesel exporter to the EU within just three years, as noted by the European Biodiesel Board (EBB). This rapid growth has led to suspicions and allegations within the EU industry that China might be exporting Palm Oil based bio-diesel (PME) and labelling it as UCO based (UCOME). CPO is restricted as a bio-diesel feedstock in the EU due to concerns over deforestation. Despite the projected surge in global demand until 2030 for renewable fuels, particularly Sustainable Aviation Fuel (SAF), the current biofuels markets remain oversupplied. Ample spare capacity and supply have prompted Shell, BP, and Chevron to alter their plans for standalone bio-refining units. Additionally, many producers have faced negative margins over the past two years, as reported by the industry body EWABA (Source: PLATTS). On the positive side, the EU’s commitment to energy transition and the strengthening of renewable energy quotas offer a more promising long term outlook. Under EU directives, member countries are required to ensure that renewable energy accounts for at least 14% of final energy consumption in transport by 2030, with a minimum of 3.5% coming from advanced biofuels.

“In complex industry landscapes driven by market uncertainty, regulatory shifts and ever evolving competitive landscape, the sourcing of reliable and independent Biofuels pricing to evaluate your portfolio is paramount.” Francesca Marrone, Energy & Commodities Product Manager. The charts below, powered by data drawn by our European Biofuel desk, show FAME and HVO FOB ARA Forward curves.

At TraditionData, we leverage our leading broking desk expertise and market insights to offer clients reliable, independent, and market-driven indicative pricing. Contact us to learn more about TraditionData’s comprehensive data coverage for European Biofuels and gain insights into traditionally opaque markets.

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