The premiums for European RME and FAME 0 biodiesel hit 31-month and 32-month lows, respectively, Thursday as bullish gasoil added to the downward pressure on the premiums.
The RME premium fell to $328/mt FOB ARA, down $1 on the week, but FAME 0 fell faster, by $26, to $224/mt FOB ARA. These lower postings have been largely due to front-month ICE gasoil futures, against which biodiesel premiums are calculated, rising $21.25 on the week to $597/mt in line with the entire oil complex.
Soy-derived biodiesel imports from Argentina have weighed heavily on the market, driving up stocks across much of Europe, aiding the falling FAME 0 premium whilst a lack of winter demand, due to FAME 0's inferior cold weather properties, also contributed to the lower premium.
RME in contrast has also been falling on lower vegoils in Europe as the cost of production has fallen so market participants have been more reluctant to bid up, causing offers to come down.
"RME is moving on vegoils due to a lack of change in fundamentals," a source said Thursday as demand is largely constant during the winter, and there is ample supply, for use either as pure RME, or as a blendstock for various FAME blends.
Front-month CBOT soybean oil futures have fallen 1.25 cents from December 1 to 32.67 cents/lb Thursday, highlighting the impact that vegoils have had.
This was further highlighted in the soybean oil-gasoil (BO-GO) relationship, an indicator for biodiesel market strength, which has fallen to $123.25/mt Thursday from $180.31/mt on December 1.
