The decision by the Argentinean government set an 8% export tariff for biodiesel is expected to have a considerable impact on the European market, where there has been a huge influx of SME since the EU reduced anti-dumping duties on imports from Argentina in September.
This decision is due to come into effect January 1, 2018, a decree published Wednesday in the country's Official Gazette said.
The new Argentinian export tariff could now support FAME 0, either by making imports more expensive or by reducing their overall volume.
"With the new tax coming in, it will make the landing price much higher and so probably pull up FAME," a source said, adding that "people don't want worse margins than they already are, or there will be a tightness in alternative blendstock."
As a result, this should also mean the RME's premium to FAME 0 narrow much more than expected, as the rapeseed based product is not expected to be affected as much by the change. "RME is feedstock driven so should stay in relation there," a source said.
The SME imports that have reached the European market have kept biodiesel prices in Europe suppressed, especially FAME 0 premiums which have stayed at over two-year lows for most of this period, as there has been an abundance of SME to be used as a blendstock.
The government justified the decision as a harmonization between the exporting rights of biodiesel and soybean oil, the main raw material for biodiesel (SME) in Argentina.
The decree also states that the price of biodiesel sold in Argentina domestically will be decided by the Ministry of Energy and Mining.
The move is seen as a response to the recent imposition of anti-dumping duties on Argentinian biodiesel by the US, and accusations that the Argentine biodiesel industry is subsidized.