Protectionistic Pressures Cloud Biodiesel Outlook

The biodiesel complex continues to wrestle with conflicting signals as bean oil futures pushed higher today to 48.66 cents/lb, narrowing the carry to July to just -0.43. This strength lifted D4 RINs to 1.095, yet the screen biodiesel crush margin remains near -40 cents per gallon — deeply negative despite firmer RIN pricing. LCFS credit values below $60/ton highlight how crucial state-level support has become, particularly for renewable diesel operators in California. I like to follow the coefficient of bean oil as a % of ICE gasoil, and it is proving very high at 1.72.

Recent data from the EPA’s EMTS shows a notable rebound in D4 RIN generation in March, reaching 573 million, up 27% month-over-month. A substantial share of this increase came from foreign renewable diesel imports, with nearly 30 million gallons sourced from Singapore (Neste) and Newfoundland (Braya). Most of these volumes landed in California, directly supporting compliance under the LCFS and RFS programs. Critically, this D4 RIN issuance is now a key economic pillar supporting Neste Singapore’s exports, effectively anchoring its competitive position in the U.S. West Coast market amid shrinking domestic production margins.

In Europe, structural pressures are intensifying. Total’s move to co-process SAF at its Belgian refinery marks a pivot in strategy across the continent. Rather than building dedicated units, refiners are leveraging existing infrastructure — a shift that threatens the economic viability of standalone HVO/SAF projects. In spot trading, UCOME remains the high watermark, trading at a premium of $830/mt over ICE gasoil, compared to $662/mt for FAME, maintaining a wide $168/mt UCOME/FAME spread.

Trade protectionism is also shaping the European landscape. The UK’s decision to extend countervailing duties on Argentine biodiesel for another five years effectively shuts out one of the few competitive external suppliers. While the move protects European producers, it risks further fragmenting global flows. For U.S. renewable diesel exporters, this action raises a caution flag — though the UK may be more reluctant to target U.S. imports given the threat of retaliatory tariffs under Section 301, which the Trump administration has wielded aggressively in past disputes.

At the same time, logistics remain a limiting factor in the EU, even as conditions improve on the Rhine. The Kaub bottleneck on the Rhine now allows vessels over 1,400 tons, and Duisburg’s loading capacity has rebounded to around 80%. However, freight rates remain elevated, with Rotterdam–Basel lanes at €23.75/ton and Rotterdam–Duisburg at €10/ton. This adds to cost pressure, particularly for inland producers already contending with high feedstock differentials and the absence of RIN or LCFS-style support mechanisms.

In Asia, vegetable oil markets surged today with CPO futures breaking above 4,000 ringgit/mt, aided by a weaker Malaysian ringgit and firm sentiment across related oils. However, the more strategic shift is in biofuel policy: Indonesia is signaling a pivot toward ethanol, with APROBI urging regulatory clarity on the government’s ambitious plan to roll out 500 bioethanol plants. With POGO still firmly above +310, Indonesia’s dual mandate between biodiesel and ethanol could reshape regional demand dynamics.