Divergent Trends: Global Biodiesel Market Grapples with Price Fluctuations Amid Demand Oscillations

Biodiesel prices are currently exhibiting a divergent trend, with a decline noted in the European region due to low demand and increased palm oil production. Conversely, prices in the APAC region have seen an incline, driven by heightened demand from importing countries.

In the APAC region, specifically in South Korea, Biodiesel prices demonstrated an upward trajectory during the week ending on March 1st. The Biodiesel UCO FOB Busan prices increased by 1.3%, climbing from USD 1510/MT to USD 1530/MT. Both output and new orders within the manufacturing sector experienced growth, contributing significantly to the overall upswing in Biodiesel prices. Despite a slowdown in export orders due to diminished demand from importing countries, the domestic demand in South Korea remained robust. This resilience in domestic demand resulted in only a marginal increase in prices. Furthermore, backlogs of work increased, albeit with smaller advances in activity and demand. In response to heightened capacity pressures, firms in the Biodiesel industry raised their staffing levels. Despite the growth occurring at diminishing rates, both output and new orders contributed to the overall rise in Biodiesel prices. In Indonesia, a significant factor influencing the upward trend is the depletion of palm oil inventories in the country, a leading global producer. Forecasts suggest that Indonesia's palm oil production in 2024 will be at least one million tons lower than the previous year (2023), resulting in constrained stockpiles. In Malaysia, there was a rebound in Biodiesel prices following a previous week of decline. The country's plantation and commodities minister anticipate strong demand for palm oil from key markets such as India and China in the coming year, driven by supply concerns and adverse weather conditions in India, prompting increased imports of edible oils.

Conversely, the European Biodiesel market experienced fluctuations during the same period, with Belgium notably witnessing a significant decline of 3.5% during the week ending on March 1st. This downturn is linked to changes in the rapeseed cultivation landscape across Europe, characterized by an overall reduction in acreage. Despite regional variations, a clear trend has emerged: the previously upward trajectory for rapeseed has been disrupted, and the total cultivation area has returned to normal levels across Europe. The overall structure of rapeseed oil has seen an increase due to subdued seed prices, leading to farmers hesitating to sell their seeds. These combined factors contributed to the decline in Biodiesel prices in the German market. Overall, the global Biodiesel market is influenced by diverse factors, resulting in varied price movements across different regions.

ChemAnalyst's analysis suggests that the recent increase in Biodiesel prices may not be sustainable, as it occurred at a decreasing rate. There is an anticipation of a potential decline in Biodiesel prices, primarily driven by a slowdown in spot purchases. The expectation is that once spot purchases will stabilize and supply issues are resolved, prices may either return to lower levels or remain stable. Specifically in the European market, there is a forecast for a potential fall in Biodiesel prices. This projection is based on the observed long-term decline in prices in the European region. The analysis suggests that the prevailing trend of decreasing prices may persist.