As the palm oil-gasoil spread between the Bursa Malaysia palm oil futures contract and the front month ICE gasoil futures contract hit a new record of $148.44/mt Thursday, delegates at the Enmore Global Biodiesel conference 2015 in Singapore discussed the impact of falling crude prices and biodiesel mandates on global biofuel demand.
Biofuels were quite stable because blending mandates kept demand reasonably strong during 2015, Henri Bardon, managing director of Solfuels, said.
Although, the end of the year tends to be bearish, he said that biodiesel had exhibited "an amazing ability" to show strong growth during the year.
He expected demand to stay reasonably strong next year as well, he added.
This is because biodiesel blending mandates in Europe ranging from 5% to 7.5% across different countries provided the bulk of the demand for Malaysian biodiesel, Maelle Soares Pinto, director, Stratas Advisors, said in a presentation.
EU demand for palm methyl ester was stable around 1.9 million-2 million mt, said Caroline Midgley, director at LMC International.
The EU gets its PME supply from Malaysia as Indonesian PME draws anti-dumping tariffs.
However, a low crude oil price during 2015, that has trended further downwards in the last few days, made the discretionary blending of biodiesel into gasoil non-viable.
Typically Asian PME needs to be $120/mt lower than gasoil for blenders to make purchases for discretionary PME blending.
Government mandates make it essential for oil companies to blend biofuels with fossil fuels to meet greenhouse gas emission cut targets.
Although Malaysia was exporting its biodiesel regularly to Europe, there seemed to be no avenue for palm oil exports from Asia to the US, Bardon said.
