Cheap imports prompt ADM to idle Germany biodiesel plant

A Germany-based biodiesel plant owned by US agribusiness conglomerate ADM has been mothballed in the wake of weak prices and a flood of cheap imports from Argentina and Indonesia, which are no longer subject to EU import duties.

ADM said in statement today that the 275,000 tonnes/year plant would cease production for all of the second quarter this year, a decision that would be reviewed during the July-September period.

"Since September 2017, the European Union has seen an influx of imported biodiesel which has placed significant pressure on the local market, impacting profitability for European-based producers. With continued imports and increasingly poor margins, the company has taken the difficult decision to cut back production in the region,” the company said in a statement.

ADM is likely to be followed by other companies in cutting back production, the CEO of German biofuels producer Verbio told Reuters.

"I expect that some EU biodiesel producers, especially small-sized companies, will have to reduce production or even close," Claus Sauter was reported as saying.

The EU this month removed duties on biodiesel imports that were placed on 13 Argentine and Indonesian producers following the conclusion of legal proceedings at the European Court of Justice.

In 2017, the EU cut anti-dumping duties to between 4.5% and 8.1% for Argentinian biodiesel from the original rates of 22%-25.7%, while the rates for Indonesian product were retained at those set in 2013 - between 8.8% and 20.5%.

However, a consultant with an Argentinian biofuels lobby Carbio told Agricensus, a sister website to Energycensus, that the removal of these duties would likely be temporary until the European Commission can reinstate them at a different level.

Producers say there is a double impact from cheaper imports, which use soy oil and palm oil, commodities that are less costly than the rapeseed oil used by EU-based producers.  

European producers say that cheap imports are displacing domestic biodiesel from the marketplace and have depressed prices in the EU, eroding margins further.

Prices for Fatty Acid Methyl Ester (FAME 0), the benchmark price for biodiesel in Europe, have fallen to near $800/mt, down 10% over the last five months, according to Energy Census data.

Overcapacity

At the beginning of 2017, prices for FAME 0 were 20% higher than now, according to figures on biofuels producer Neste’s website.  

Besides Germany, Spain’s smaller biodiesel producers are viewed as particularly at risk from cheap imports and weaker prices because of longstanding low utilization of plants and overcapacity.

In October last year, French biodiesel producer Saipol said it would cut biodiesel production to 700,000 metric tons in 2018 from 1.3 million tons in 2017 because of an expected surge in Argentinian imports.