The RME biodiesel premium to ICE gasoil futures has hit a record high on an uptick in demand at the end of the year, while available RME volumes fell following a period of reduced production.
The RED RME premium was assessed at $566.25/mt Friday, up $20/mt day on day and $14.25/mt above its previous record reached last Monday.
"After a long period of low margins, demand is now catching up and stocks are low, so buyers pay up," one source said.
European RME producers had to cut runs at the start of December as margins fell into negative territory, causing reduced availability during the final week before Christmas. Margins fell due to strong vegoil prices, while the plunge in global energy prices dragged down the outright RME price.
Rapeseed oil prices came off over the course of last week but rebounded strongly Friday, following a rise in global vegoil prices.
"Chicago was surprisingly firm today," a source said Friday.
Rapeseed oil prices for January delivery were heard at Eur745/mt Friday, up Eur10/mt the day before.
Over the course of last week, the January ICE gasoil contract rebounded gradually after reaching a multi-year low of $331/mt Monday. The contract was assessed at $343/mt at Friday.
As biodiesel prices diverged further from lower conventional diesel prices, blenders took a step back during the past two weeks in the hope gasoil futures would rebound. However, biodiesel demand remains mandated in Europe and blenders with shorts had to purchase volumes.
The spot RME production margin rebounded Friday, as the outright RME price rose $27.25/mt on the day.
The differential between the outright RME price and the spot rapeseed oil price was Eur95.10/mt, above the Eur80/mt generally seen as the break-even level for producers, after two weeks of negative spot margins.
