The FAME 0 market is exhibiting strong backwardation owing to the high stock levels of PME on the prompt, coupled with future imports of PME and FAME 0 into the Amsterdam-Rotterdam-Antwerp region, sources said Tuesday.
The FAME 0 (Fatty Acid Methyl Ester) market has risen over recent weeks to $904.75/mt Tuesday, from $852/mt April 21, owing to increased demand on the prompt.
Despite this, and with demand expected to increase further into the middle of the year, the market remains in backwardation.
"There is much PME (Palm Methyl Ester) -- stocks are still high and more is coming in. This is giving the market the bearish flavor," a source said.
The increased demand moving into the summer has recently become more balanced with the increased supply.
"I think we have hit the ceiling for biodiesel -- demand and supply are at the same level, this is why flat prices have not moved very much," a source said.
Many of the imports into Europe have come from Southeast Asia in recent weeks, with imports at a high level for April, with cargo inspectors ITS showing that around 62,000 mt of RED PME had been shipped from Indonesia and Malaysia during April.
These cargoes, expected to arrive during May and June, are largely causing the backwardation in the market.
