Indications for VLSFO with a bio-mix of a maximum of 30% in Rotterdam were at $759.00-779.00/mt and a bio-mix of maximum of 24% in Singapore were at $734.00-754.00/mt, both extending gains from the previous week. Deals were reportedly done at a premium of $175-185/mt to FOB Rotterdam Barges 0.5％S fuel oil and at a premium of $129-139/mt to Singapore 0.5%S fuel oil. The European Union Allowance (EUA) futures price of carbon dioxide (CO2) was currently in the €54's/mt.

On the back of high transportation costs, international prices of UCO-based FAME (including UCOME) remained in the high-$1070's/mt. Tankers and chemical tankers were avoiding the Red Sea/Suez Canal route, leading to increased freight rates as they voyaged between Asia and Europe via the Cape of Good Hope, thus pushing up FAME prices. Nevertheless, premiums against the FOB Rotterdam Barges 0.5%S fuel oil market had been sluggish.

The increasing surplus of biodiesel was attributed to the circulation of cheap Chinese products in Europe. Despite some of these products being 1st Generation biofuels derived from edible parts, they were sold in Europe as 2nd Generation biodiesel derived from non-edible and renewable energy sources. Inventory was also increasing, contributing to a sharp drop in prices. The European Parliament was likely to impose interim tariffs on Chinese exports by July 2024 to ensure fair trade of biodiesel in Europe.

The downturn in demand for Sustainable Aviation Fuel (SAF) was also cited as one of the factors contributing to the surplus of biodiesel. According to the International Civil Aviation Organization (ICAO), SAF production in 2024 is estimated at 1.875 billion liters (1.5 million tons), three times larger than that of 2023. However, a sense of surplus globally had grown due to a lack of actual demand. While SAF demand was expected to surge in 2024, concerns about surplus biodiesel supply were growing, leading to softening prices.

The demand for bio-bunkers in Rotterdam was said to be stable. However, subsidies for bio-bunkers delivered to Rotterdam were reduced. Hence, fixed prices in Rotterdam were surpassing those in Singapore.

In Singapore, major shipping companies issued more procurement tenders, accelerating price competition. Market players mentioned that offers were set at a premium of $125-165/mt to the Singapore 0.5%S fuel oil quotations, although premiums varied depending on procurement lots. Sellers suggested that installing onshore storages for bio-bunkers was essential to prepare for future price competition. In Singapore, it was necessary to store over 300,000 tons of biodiesel (B100) and increase the monthly sales volume of B24-VLSFO to approximately 100,000 tons, double the current level. On the other hand, it was also noted that if the cost of VLSFO became cheaper, fuel conversion would be easier.