Market sentiment has turned more bearish on European RME biodiesel prices, with RME's premium to FAME 0 now expected to narrow toward the end of February.
Earlier market sources were saying they expected the RME price to rise toward the end of February.
The change in sentiment is down to an abundance of alternative blendstock to RME, stemming from the high SME imports from Argentina, which have facilitated the blending of FAME with better cold qualities, thus reducing demand for RME. Winter demand is typically much higher for RME than for FAME 0 owing to its superior cold properties.
Also squeezing the premium are bearish global feedstocks due to higher palm oil stocks in Malaysia, and large Ukrainian rapeseed imports into Europe.
The SME imports, which have been flowing into Europe since September 2017 when antidumping duties against Argentinian SME imports were reduced, have boosted stocks across much of Europe, enabling the blending of FAME -5 and FAME -10, which over previous winters was largely interchangeable with RME as there was not such an abundance of blendstock.
To date, since the antidumping duties were reduced, over 700,000 mt of SME has been booked, with over 500,000 mt arrived in Europe to date.
Of this, S&P Global Platts estimates that around 60% has moved to Northwest Europe, with the remaining 40% moving from Argentina to the Mediterranean.
SME is more readily used in the Mediterranean as it can be blended directly with diesel, rather than used as a blendstock for FAME, as the Mediterranean typically experiences much less cold winters.
