The future of antidumping duties against Argentinian biodiesel were finally confirmed this week, stipulating duties to be reduced by September 28. S&P Global Platts European biofuels editor, George Griffiths and global editorial director for agriculture, Tim Worledge discuss the potential impacts on the European biodiesel market that could emerge following increased imports of the soybean-derived product.
Related article: EU agrees to reduce Argentinian biodiesel antidumping duties
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Tim Worledge: Hello and welcome to another Platts Commodity Spotlight podcast. My name is Tim Worledge. I'm in the studio here with George Griffiths and we're going to be looking at biodiesel today, specifically we're going to be looking at European biodiesel and some of the upcoming changes. Much anticipated, it's been a momentous week in many ways and, George, we're talking about antidumping specifically. There's been some news specifically around Argentinean biodiesel. What can you share with us?
George Griffiths: Thanks, Tim. So this has been quite a momentous week, with the EU set to reduce the antidumping duties on Argentinian biodiesel that's been in place since November 2013. The path has largely being cleared for increased biodiesel imports into Europe and this has cast a largely bearish sentiment across much of the market on these increased supply expectations.
The decision was initially in place for July 27, however, it was subsequently postponed until September 7. So, European Commission sources had the following to say on September 7.
They said, "Compliance with WTO rules is, for the EU, a cornerstone of its trade policy. Member states have now been consulted on the draft of the implementing regulation which will bring the measures against biodiesel from Argentina into conformity with our WTO obligations. Everything is on track for the EU to implement the WTO ruling, as we agreed with Argentina, by September 28, 2017.
TW: Well, that all sounds very grand, but what impact is that going to have for European biodiesel?
GG: So, the market's currently divided on how this will make a difference. Some don't see a large impact coming anytime soon, largely due to the poor winter qualities of the soybean-derived biodiesel from Argentina. And the falling temperatures across Europe as we approach the winter months seem to back this up.
This side of the market expects increased product to reach the European biodiesel sphere towards Q2 2018. (The) other side of the market have a slightly more bearish view, expecting product to arrive and be used in the Mediterranean as soon as it can, as the Mediterranean typically experiences much more temperate winters.
TW: So, are these imports just going to replace the locally used FAME and RME, the two sort of main grades for biodiesel in the European region?
GG: In short, no. Issues remain with these imports and they would only serve to augment European biodiesel policy. Typically containing lower greenhouse gas savings, there are questions surrounding the feasibility of this product making its way into countries such as Germany where the bending obligation is based solely on a greenhouse gas saving basis.
This is compounded by issues surrounding the new greenhouse gas calculations in Europe, from the start of September, that resulted in in lower GHG savings being offered across the board.
As such, biodiesel from waste sources such as UCOME, which comes from used cooking oil, experience significantly higher demand towards the end of August for a product that had previous proof of sustainability attached. This resulted in the increased demand for this product as it became increasingly scarce.
This is because the policy has no retroactive clauses so all biodiesel produced prior to September retains its previous greenhouse gas savings. However, new product must abide to the new rules surrounding methanol usage in the supply chain.
TW: So, there's a lot of complex stuff there. If high greenhouse gas saving material could be sourced, will this circumvent a lot of these issues?
GG: There are also issues regarding cetane numbers, which are typically lower for SME from from Argentina, and also iodine content which is much higher than in Europe. So, some market participants expect this to pose little impact in terms of trade flows as these things can be amended.
Regardless of the nature of the volume of these future imports, one thing is for certain and that is that the biodiesel market in Europe will take some time to digest this market-moving news.
TW: Fantastic, thank you very much George. It sounds like on one level a very clear case of more flows coming in, but there are all sorts of 'devil in the detail' around the, the actual specifications themselves.
Please do stay tuned. We'll be back with another podcast in the near future. In the meantime, if you want to know what we're up to at agriculture, you can always have a look at platts.com/agriculture, or you can follow us on Twitter @PlattsAg.