Originally Published in the Prima CarbonZero European Green Diesel Report
Waste feedstock prices in Europe held onto their recent modest gains over the past week, despite a dip in the UCOME market that further squeezed biofuel producer margins. T1 UCO CIF ARA (5% FFA content in flexi) was last assessed at $1,075/t, up slightly from $1,070/t on Thursday but flat week-over-week. However, inland European markets showed more strength, with UCO Exworks Netherlands prices rising to €1,140/t, up from €1,130/t a week prior.
Figure 1: European Wastes Rise, Source: Prima CarbonZero, ResourceWise
The UCOME market lost some of its earlier momentum, with FOB ARA prices slipping to $1,417/t, down $8/t week-over-week. Market participants are navigating a quieter trading environment, with many seeking clarity amid political uncertainty affecting the biofuels sector. The spread between UCOME FOB ARA (Zero degrees CFPP) and T1 UCO CIF ARA narrowed to $342/t, down from $350/t a week earlier.
Despite these margin shifts, European biodiesel producers have found some room to improve their bids, as competition from Chinese producers has diminished. This has led to stronger demand for European-produced biodiesel, though industry players remain cautious as SAF prices continue to decline, raising concerns about HVO’s competitiveness in Europe’s road transport fuel sector.
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The FOB ARA spot price for sustainable aviation fuel (SAF) was last assessed at $1,800/t, plummeting $130/t in just a week. This sharp drop reflects the influx of Chinese SAF into the European market, which is disrupting fuel blending economics and putting additional pressure on HVO markets.
With domestic production and imports now exceeding mandated demand in Europe, market players are increasingly concerned about oversupply in the waste-based biofuels market. The potential for SAF to undercut HVO’s role in road transport blending could reshape fuel demand dynamics in the coming months.
In China, UCO markets remained subdued as the country entered its New Year holiday period. Traders reported stable prices, with recent trades for 5,000 tons of standard Chinese UCO (7.5% FFA, FOB China) at around $1,018/t on January 21. A smaller-volume trade was heard at similar levels, though higher-FFA products (10–15%) could weigh on price assessments.
ISCC-certified UCO FOB China in bulk was last assessed at $1,005/t, unchanged week-over-week, while product in flexitanks remained at $1,025/t. The HVO-grade UCO market was also quiet, with DAP China collection prices at RMB7,400/t, translating to a FOB China equivalent of $1,032/t.
Offers for HVO-grade DAP China (15% FFA) were reported at similar levels. ISCC-certified HVO-grade UCO FOB China in bulk held steady at $1,030/t, with flexitank cargoes slightly higher at $1,050/t. UCO with U.S. paperwork was assessed at $1,045/t.
Elsewhere in Asia, UCO prices remained stable. A Chinese renewable fuels producer pegged the reference price for UCO (5-7% FFA) on an Indonesia basis at $955/t, unchanged from the prior week. The same product on a FOB Vietnam basis was priced at $945/t, while FOB PKPG prices held at $995/t.
Meanwhile, palm oil mill effluent (POME) prices rose, with FOB Indonesia POME assessed at $995/t, a $25/t increase from ResourceWise’s last assessment. Similarly, FOB Malaysia POME moved up $25/t to $1,005/t.
China’s waste-based biodiesel market remained quiet, with some producers considering production shutdowns as trading UCO proved more profitable than producing UCOME.
Leading up to the New Year holiday, market activity was subdued, with offers for UCOME FOB China at $1,070–1,080/t on January 10 and bids reported at $1,020/t. By January 14, offers ranged between $1,080–1,000/t. UCOME Ex-factory China was most recently assessed at RMB7,390/t ($1,019/t), aligning with FOB levels.
ResourceWise’s UCOME FOB China bulk price assessment at major ports remained steady at $1,060/t, unchanged from the previous week. However, arbitrage for Chinese biodiesel exports to Europe remains closed due to high freight costs and trade barriers.
With freight rates at $105/t, a 6.5% fixed duty, and the 36.4% anti-dumping duty on non-cooperating companies, the arbitrage window remains closed by $248/t, widening from $230/t last week. For cooperating companies facing the lower 23.7% anti-dumping duty, the arbitrage remains closed by $100/t, up from $82/t the previous week.
Figure 2: Asian Bunker Suppliers Report Higher UCOME Costs, Source: Prima CarbonZero, ResourceWise
With global trade dynamics in flux, biofuel market participants must stay agile. If SAF continues undercutting HVO, we could see shifts in European blending strategies. Meanwhile, the resumption of full trading activity post-Chinese New Year will reveal whether China remains a muted market force or reasserts itself in the waste-based biofuels space.