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Listen: EU Commission anti-subsidy investigation: a glimmer of hope for EU biodiesel producers?

With a lack of clarity over when biodiesel antidumping duties against Indonesia and Argentina will be removed, and the EU Commission launching an Argentinian biodiesel anti-subsidy investigation, George Griffiths, S&P Global Platts senior biofuels specialist, and Emma Kettley, S&P Global Platts commodity associate, look at the market reaction and the potential future of these emerging trade flows. Will import volumes reach the levels seen before antidumping duties were implemented? And will the anti-subsidy investigation provide a welcome respite for EU biodiesel producers?

Related podcast: As Indonesian and Argentinian biodiesel antidumping duties end, is there a respite for palm oil biofuel in Europe?


We welcome any feedback or suggestions for topics. Contact us at webeditor@platts.com.


View Full Transcript

Podcast Transcript


PODCAST: EU COMMISSION ANTI-SUBSIDY INVESTIGATION: A GLIMMER OF HOPE FOR EU BIODIESEL PRODUCERS?


GEORGE GRIFFITHS: Hello and welcome to another S&P Global Platts Commodity Spotlight podcast for February 1, 2018. My name is George Griffiths, senior biofuel specialist here in London, and I'm joined in the studio by my colleague Emma Kettley, our Commodity Associate, and we're going to be talking biodiesel today, specifically looking at European biodiesel. Emma, last week we were talking about the potential removal of biodiesel antidumping duties and what that could bring to the European biodiesel realm.


Do we have an update on this situation? How has the market reacted to this news?


EMMA KETTLEY: Well the market is still looking for clarity over when these antidumping duties against Indonesia and Argentina are going to be lifted and as a result we have seen a lot of volatility in the market, with some market participants commenting that this is the most volatile they have seen the market in the last 5 years. Initially, the FAME 0 and RME premiums plummeted 38 month low for FAME 0 and a 32 month low for RME, but we are now starting to see a bit of recovery with both premiums jumping over $20 since Monday 29th Jan. The lifting of these anti-dumping duties will inevitably result in large volumes of SME (soy based methyl ester) from Argentina and PME (palm based methyl ester) from Indonesia coming into Europe and pressuring prices downwards.


GEORGE GRIFFITHS: How large could these potential flows be? Are we going to see the same volumes making their way into Europe as before the antidumping duties were put in place?


EMMA KETTLEY: Market sentiment at the moment is that there is no reason why volumes couldn't reach the levels we were at before the antidumping duties were implemented. Import volumes can change very quickly and Europe has already seen around 1.2million metric tonnes of SME come in from Argentina since September 2017 when the antidumping duties were reduced. The market has changed somewhat however with a heavier demand focus on double counting and high GHG saving products such as UCOME in order to reach the higher mandates, compared to when the antidumping duties were implemented in November 2013.


GEORGE GRIFFITHS: Surely the impacts of these biodiesel imports won't be felt in markets such as Germany which mandate their biofuel usage on a greenhouse gas savings basis? Would they not need even higher GHG saving product?


EMMA KETTLEY: There is certainly expected to be a difference in demand for the higher GHG savings products between Germany and countries such as The Netherlands and the UK, however not necessarily the way we would initially expect. German traders don't believe there is any need for the high GHG savings of UCOME when they can just use their own products and top up with the cheaper methane-capture PME coming in from Asia, and that it'll be the UK and the Netherlands with the increased UCOME demand so they can take advantage of the double-counting properties towards their volumetric mandates.


GEORGE GRIFFITHS: So it’s all doom and gloom for European biodiesel producers then, with all these flows coming in, or is there any respite for them in the future?

EMMA KETTLEY: European producers are certainly not happy at the moment that is for sure, their production margins are already extremely tight with high feedstock values and pressured down product prices, and these anticipated import volumes will only exacerbate that situation, however there is some hope for them yet.


As you discussed in your previous podcast George, the RED II proposal that was approved by the EU Parliament on January 17 included an addendum which banned palm-based biodiesel from being used towards mandates from 2021 onwards, although unfortunately for the producers there is a general consensus among market participants that this may not make it through the trilogue phase with the EU Commission and Council and a decision may be made to introduce high tariffs rather than a blanket ban.


On a brighter note for the producers, the EU Commission announced yesterday (January 31) that they have launched an investigation into Argentinian biodiesel imports and whether the Argentinian exporters benefit from unfair subsidies following a complaint lodged by the European Biodiesel board in December 2017. Should this prove successful it has the potential to stop flows from Argentina into Europe entirely, which would be welcome news for the European biodiesel producers who were already voicing concerns that they wouldn't be able to compete price-wise with the subsidized imports coming in.


GEORGE GRIFFITHS: It looks like we are very much in the wait-and-see mode that market participants had been predicting. All eyes on the next few months then to see whether these changes materialize or not. Thank you very much for your time. We'll be back with another podcast in the near future. In the meantime, if you want to know what we're up to here with our agriculture coverage, you can always have a look at platts.com/agriculture, or you can follow us on Twitter @PlattsAg.