Asian UCO prices hit two-month highs amid geopolitical tensions, SAF demand

Asian used cooking oil prices hit two-month highs June 19, amid geopolitical tensions, higher seasonal demand and the emergence of an arbitrage window.

Prices recovered from lows seen in April-May, as demand and inquiries from buyers picked up after low demand in early 2025.

A trader based in the Straits indicated that the overall market is anticipating a further short-term increase in prices due to hints of a potential US involvement in the Israel-Iran conflict.

"Current offers in the Straits UCO market are at elevated levels, making it difficult for buyers to purchase at these prices," the trader noted, adding that some buyers are exercising caution and waiting for prices to stabilize before placing their bids again.

Platts, part of S&P Global Commodity Insights, assessed the Straits UCO spot price at $1,030/mt, unchanged day over day. The price declined 11.88% from $1,095/mt FOB in March 2025 to $965/mt FOB in late April 2025.

China's UCO spot price also fell 6.57% from $1,065/mt FOB in March 2025 to $995/mt FOB in early May 2025. Both declines reflect uncertainties related to the US biofuels tax credit and the announcement of reciprocal tariffs.

A Chinese UCO producer noted that while a few negotiations are underway, nothing has been finalized due to the recent price increase. Collection costs for UCO locally have gradually risen by Yuan 150-200/mt week over week. The producer observed that UCO prices in China have increased since the escalation of the Israel-Iran conflict.

"However, it ultimately depends on how buyers will respond," the producer said, adding that the overall market is trending higher from the prior week.

A China UCO trader said prices for sustainable aviation fuel have been rising due to improved demand, leading producers of hydrotreated vegetable oil and SAF to continue purchasing feedstocks. This increased demand, combined with the risks associated with the Israel-Iran conflict, has contributed to the surge in UCO prices.

Platts assessed UCO FOB North China at $1,030/mt on June 19, unchanged day over day. Spot prices fell 15.44% from a high of Yuan 7,450/mt in December 2024 to Yuan 6,300/mt in mid-May 2025 due to weak domestic demand for finished products such as UCOME and SAF earlier in the year.

Platts assessed UCO ex-mill North China at Yuan 6,850/mt on June 19, unchanged day over day.

Higher overseas demand for HVO and SAF has led to increased inquiries for UCO at China's ports, resulting in a rise in UCO prices, according to a domestic producer. This growing demand for SAF is expected to push UCO prices higher, resulting in an overall upward trend in UCO, HVO and SAF values.

Strong seasonal demand in Europe ahead of the summer vacation season is also driving an increase in demand for SAF, particularly premium UCO, which has seen even greater price increases.

There is a slight arbitrage opportunity between domestic and European SAF, which has led to increased demand and buying interest for China's domestic UCO feedstock, according to a major Chinese UCO producer.

Furthermore, a China UCO collector observed rising domestic demand for UCO feedstock following China's announcement of its first export whitelist and quota for SAF at the end of April 2025.