Biofuel Bunker Snapshot: Chinese biodiesel imports to be 'killed off' by EU tariffs

The EU tariffs to come into force from 16 August

Dutch rebates for biofuel shrink

Singapore

Singapore’s B24-VLSFO UCOME price has declined by $7/mt in the past week, while its B24-LSMGO UCOME price has fallen by $9/mt. The two bio-bunker benchmarks have declined amid declining values for pure VLSFO ($4/mt) and LSMGO ($9/mt).

The UCOME FOB China benchmark was assessed at $990/mt on Friday by PRIMA Markets, unchanged on the week.

On Friday, the European Commission announced that it will impose provisional duties of up to 36.4% on biodiesel imports from China. PRIMA said “the EU anti-dumping results and its associated duties (ADDs) have effectively killed off Chinese biodiesel trading prospects into Europe”.

A lack of EU demand for Chinese biodiesel could result in more Chinese UCOME being exported to meet demand in countries like Singapore, sources say.

It is unlikely that Chinese UCOME exported to Singapore could find ways to be re-exported into the EU, Faris Razanah Zharfan told ENGINE. He is the founder of the Indonesian waste-based biofuel firm Beli Jelantah.

Zharfan pointed out that Singaporean biodiesel exporters are required to disclose information about biofuel feedstocks' origin countries and refineries. This can make it difficult to hide a biodiesel's Chinese origin.

Spot bio-bunker demand remains low in Singapore, two sources said. B24-VLSFO UCOME prices of $726-765/mt were quoted by suppliers last week, unchanged from the week before, a source said.

Singapore’s B24-VLSFO price premium over pure VLSFO has narrowed by $3/mt on the week to $117/mt.

Malaysian physical bunker supplier Armada Meridian recently bunkered a Yang Ming vessel with a B24-VLSFO blend in Malaysia’s Port Klang. Some suppliers can deliver B24-VLSFO prompt, while others require lead times of 10–15 days to ensure smooth coverage, a trader told ENGINE.

B24-VLSFO UCOME can be secured in Port Klang, but its price is usually much higher compared to Singapore’s B24-VLSFO UCOME, the trader said.

Rotterdam

Rotterdam’s B30-VLSFO HBE price has declined by $8/mt in the past week, while its B30-LSMGO HBE price has dropped by a greater $14/mt. A $32/mt drop in palm oil mill effluent methyl ester (POMEME) price has pulled both benchmarks lower.

Unlike UCOME, POMEME-based biofuel bunker blends qualify for Dutch HBE credits. These credits hold value for bunker suppliers and can translate into price rebates for buyers, making POMEME a popular feedstock for biofuel bunker blending.

PRIMA has assessed HBE A tickets for 2024 at €8.00/GJ ($8.71/GJ), down by €0.35/GJ ($0.38/GJ) on the week. This equates to a theoretical $77/mt rebate for B30 HBE blends sold in the Netherlands, which is about $4/mt less than a week ago.

Biofuel price premiums over pure conventional fuels in Rotterdam are $189/mt for B30-VLSFO HBE blends and $136/mt for B30-LSMGO HBE blends. These premiums have narrowed by $9-12/mt in the past week.

The EU’s provisional duties on Chinese biodiesel imports could tighten availability of bio feedstocks for bio-bunker blending across Europe.

“The [EU] biodiesel/HVO refineries will now be looking for non-Chinese UCOs from countries such as Malaysia, Indonesia and the Middle East,” Zharfan said.

The ARA price for B30-VLSFO UCOME has declined in tandem with the B30-VLSFO HBE price in Rotterdam in the past week. This has meant that the UCOME blend remains unattractive at a $71/mt premium over the rebated HBE price.

The PRIMA-assessed UCOME FOB price in the ARA has declined by $18/mt in the past week, to $1,363/mt. The EU tariff announcement on Chinese biodiesel imports had limited to no upward impact on the UCOME ARA FOB benchmark. The reason for this limited impact is that some market participants had already anticipated the possibility of EU tariffs in the past few weeks and had factored them into prices, PRIMA argues.

By Nithin Chandran

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