Biofuel Bunker Snapshot: EU tariffs unlikely to drive biodiesel prices higher in short term

The EU tariffs on Chinese biodiesel imports are set to kick in this week

Bio-premiums widen in Singapore

Singapore

Singapore’s bio-bunker prices have remained largely steady over the past week. The UCOME FOB China benchmark has held steady at $980/mt on the week, which has kept the prices stable.

PRIMA Markets says that “the Chinese market is waiting for the provisional anti-dumping duties by the European Commission to be set in stone, with trading restrictions on the likes of UCOME, FAME and HVO expected by mid-August [16 August]”.

A supplier indicated 500 mt of B24-HSFO UCOME at $625/mt on Wednesday in Singapore, which was $6/mt higher than the benchmark was assessed on Wednesday, and about $151/mt higher than pure HSFO.

Only a few suppliers in Singapore can offer B24-HSFO UCOME, while those offering it require longer lead times for delivery, a trader said. Lead times of about four weeks are recommended for B24-HSFO delivery in the port.

Lead times of up to 14 days are generally recommended for the most sought-after biofuel blend - B24-VLSFO - in Singapore.

Some sources say that more Chinese UCOME may flow into Singapore due to provisional duties imposed on Chinese biodiesel imports by the EU. This may drag Singapore’s bio-bunker prices lower.

The premium of Singapore’s B24-VLSFO UCOME over pure VLSFO has widened by $5/mt to $118/mt in the past week, while the premium of B24-LSMGO UCOME over pure LSMGO has widened by $4/mt to $94/mt.

Bio-bunker demand has been very low in China's Guangzhou. “We haven’t seen any enquiries recently," a trader said.

Rotterdam

Rotterdam’s B30 VLSFO HBE price has shed $7/mt in the past week, while its B30 LSMGO HBE price has come down by a steeper $15/mt. A $32/mt drop in the Palm Oil Mill Effluent Methyl Ester (POMEME) benchmark has contributed to put downward pressure on the two benchmarks.

Declining values of pure VLSFO ($2/mt) and pure LSMGO ($13/mt) have also added to the downward pressure.

A supplier indicated B30 VLSFO HBE at $727/mt in Rotterdam on Thursday. This was almost $14/mt higher than the benchmark was assessed on Thursday.

POMEME-based biofuel blends qualify for advanced biofuel rebates through the Dutch HBE system, making it lucrative to bunker advanced biofuels in the Dutch ports compared to ports in Belgium or other nearby countries where rebates don’t exist.

PRIMA has assessed HBE A tickets at €8.30/GJ ($9.07/GJ), marking a weekly drop of €0.18/GJ ($0.20/GJ). The ticket price is crucial as it determines how much Dutch bunker suppliers can reclaim from their authorities when selling advanced biofuels to ships. For B30-VLSFO HBE sold in the Dutch ports, this translates to about $80/mt that suppliers can reclaim.

UCOME-based biofuels don’t qualify for Dutch advanced biofuel rebates, making them expensive.

The port’s B30 VLSFO UCOME price has declined by $8/mt in the past week, while its B30 LSMGO UCOME price has dropped by $15/mt. The PRIMA-assessed UCOME FOB ARA benchmark was assessed at $1,311/mt on Friday, down by $32/mt on the week. The anti-dumping duties on Chinese biodiesel imports are unlikely to have a bullish effect on biodiesel prices in the short term, PRIMA says. 

B24-VLSFO UCOME was indicated at $775/mt in Gibraltar on Friday. Bunker supplier Peninsula recently delivered a total of 2,200 mt of B30-VLSFO to a container ship in the Spanish port of Barcelona. The company operates a type 2 IMO chemical tanker in the region, allowing it to supply bio-blends of up to B100 (100% biofuel), while other bunker tankers (oil tankers) can carry biofuel blends with a maximum concentration of 25% bio-component.

By Nithin Chandran

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