Stronger vegoil prices have pushed up the premiums for both RME and FAME 0 over the course of the week, despite front-month ICE gasoil futures continuing to post gains and reaching a a 32-month high Thursday of $607.75/mt.
FAME 0 has gained $6/mt over the week to Thursday to $230/mt and RME has risen $11 to $334/mt FOB ARA as stronger vegoils took a greater hold in the market.
A stronger euro/dollar rate, moving to a three-year high at $1.2068, also aided the rising biodiesel prices, as production margins, calculated in euros, are cut, leaving offers rising, with bids following.
With theoretical margins on the prompt touching the breakeven point, or even turning negative for RME, some upside to the RME market is expected during January.
"Vegoils could remain elevated for a few weeks but people won't jump up too much," said a source earlier in the week, expecting a downturn in vegoils towards the middle of January.
The RME premium has been experiencing strong and stable demand over the course of the winter thus far, either as pure RME or as a blendstock for FAME blends such as minus 10.
FAME 0 in contrast has experienced low demand due to the less preferential winter spec, and also the fact that soy-derived biodiesel imports from Argentina have weighed heavily on the market, driving up stock levels across much of Europe.
As a result, the RME-FAME 0 differential has rebounded to $104/mt on the prompt, having hit $79.75/mt on December 21. But this remains well below the $181.75 on November 10, hinting that SME imports are being more readily priced into the market on the prompt.
