Straits UCOME producers halt export offers in Oct as feedstock costs rise

Some biodiesel producers in the Straits have suspended used cooking oil methyl ester offers in the export market in October due to elevated feedstock costs of used cooking oil, weaker profit margins and reduced seasonal demand, trade sources said Oct. 10.

Asian UCO prices have risen 14% to 20% in 2025 from lows in April and May, as hydrotreated vegetable oil producers are increasingly sourcing it to meet the rising demand for sustainable aviation fuel.

With poor cold flow properties of UCOME, which typically experiences lower demand in the fourth quarter during the winter season in the Northern Hemisphere, margins have weakened, according to two producers in the region.

Platts, part of S&P Global Energy, assessed UCO FOB Straits at $1,100/mt on Oct. 9, up from a 2025 low of $965/mt on April 2. Platts assessed UCO North Asia at $1,160/mt on Oct. 9, rising from a low of $955/mt on May 2.

UCOME FOB Straits prices have posted single-digit percentage gains, increasing to $1,270/mt on Oct. 9 from a low of $1,198/mt on June 9, according to Platts data.

Feedstock competition

A Straits-based biodiesel producer noted that HVO manufacturers have been buying UCO with specifications similar to those required for biodiesel but at higher prices due to their ability to secure better margins, resulting in intense competition for feedstock and a substantial increase in UCOME production costs.

Platts assessed HVO (RD-A FOB Amsterdam-Rotterdam-Antwerp) at $2,630.5/mt on Oct. 9 and HVO (RD-B FOB ARA) at $2,592/mt. Platts assessed SAF CIF Northwest Europe at $2,791.25/mt on Oct. 9.

"Despite using similar feedstocks, HVO and SAF producers enjoy better margins and can bid higher for UCO cargoes, whereas UCOME producers struggle to do the same while still maintaining positive margins," the producer said.

Rising consumption of UCO in the SAF and renewable diesel sectors drove its prices to a three-year high in September. Due to its lower carbon intensity, UCO has become a preferred feedstock as organizations and countries intensify their efforts to achieve net-zero emissions targets, pressuring UCOME producers.

As UCOME demand has weakened seasonally, a second Straits biodiesel producer noted lower buying appetite from Europe compared with the beginning of 2025, stating that "most buyers are already covered."

Europe's biodiesel import volume dropped to about 248,434 mt in August from about 824,576.5 mt in July and 1.95 million mt in June, according to the latest data from S&P Global Market Intelligence's Global Trade Atlas.

A Switzerland-based biodiesel and feedstocks trader said that reduced demand for UCOME has exacerbated the strain on producers' margins. Additionally, stronger demand for rapeseed methyl ester ahead of winter in Europe has narrowed the spread with UCOME.

RME, a common type of biodiesel produced from rapeseed oil, is in higher demand in winter due to its ability to withstand temperatures as low as minus 12 C. UCOME typically trades at a premium to RME.

Platts assessed the spread between the UCOME FOB ARA and RME (RED) FOB ARA at $92.76/mt on Oct. 9, narrowing from the widest level in 2025 of $393.12/mt on Feb. 3.