[RE]fuel Report Market Commentary

The onset of cold weather saw an increase in blending across the UK’s retail fuel sector, bringing pressure to RTFC prices as market sources saw the need to blend cutting the incentive to buy certificates.

“With the cold weather, people start blending and that should negate the need to buy tickets… pretty much everybody is blending now,” one source said.

As Year 9 certificates enter their last two weeks of trading, buying appetite was scarcer although prices continued to be heard offered at parity to Year 10. Further out, Year 11 indications showed signs of coming into line as well, with offers heard last week at 22.3 p now moving down to offer levels around 22 p, alongside Year 10.

However, with the market extremely quiet and against the backdrop of weak demand, Year 9 and Year 10 certificates weakened fractionally to be assessed at 21.5p.

For the energy complex, diesel prices eased following the recent run up in crude prices, but UCOME and RME were assessed at $1,080/mt based on physical indications, with RME values surging as winter demand blew the differential to FAME 0 out to a $160/mt premium.

Elsewhere, margins for biofuel producers have come under such intense pressure lately that the UK's Vivergo announced it was bringing forward maintenance at its wheat-based ethanol production facility, and would review market conditions before deciding to restart.

Feed wheat prices have held stable for the most part, but with ethanol prices sliding and the UK government wavering on adoption of E10, margins have come under pressure.

A similar picture emerged in France, where biodiesel producer Saipol also revealed the impact that reopening Argentine biodiesel flows was having on its business by revealing further data on mothballing its Sète facility. 

The facility's 90 workers will be put on part time hours for 6 months from February 2018, according to local media reports. 

And finally, the EU's main decision-making bodies are charged with finding a path forward in order to bring new legislation on the role of crop-based fuels and emissions targets.

The European Commission, Parliament and Council all have subtly, but significantly, different perspectives that will need to align before legislation can proceed.