MethodologyContact usSupportLogin
Key takeaways:
The implications of this remain unclear and market participants remain unsure whether premiums will rebound or move between positive and negative territory in the near term. But overall, if crop-based biodiesel prices remain below fossil diesel prices, it could lead to more blending beyond mandated requirements, as finished road-going diesel already blended with biodiesel could be cheaper than without blending, depending on blending and transportation costs.
On Tuesday April 7, gasoil prices were more volatile than in the previous session, with the April contract trading in a wide range of $1,494-1,574 per tonne.
Fastmarkets assessed oil, ultra low sulphur diesel, fob ARA (gasoil) at $1,571.75 per tonne on Thursday, the highest level since the assessment began in October 2017.
And Fastmarkets assessed the biodiesel, FAME 0 premium, fob ARA at ($44.75) per tonne on the same day.
Using gasoil as a benchmark for fossil diesel and assuming a 7% blend with FAME 0, this means the base cost of road-going diesel — excluding associated costs such as transportation to a blending facility — meeting EU specifications could be $1,568.62 per tonne, effectively cheaper than the fossil gasoil alone.
Because biodiesel is usually priced at a premium to gasoil, the road fuel after blending is typically more expensive, with demand being driven by mandates rather than cost economics.
Additionally, three market participants told Fastmarkets they expected prices to remain in negative territory on Tuesday April 7, with Fastmarkets already hearing of increased discretionary blending beyond mandated demand.
Any increase in demand may be limited, however, by limitations on the use of crop biodiesel for road fuel blending — both technical and legislative — and fewer incentives for its use in marine fuel and other sectors.
Late on April 2, just as physical trade for RME and FAME 0 was heard as low as $78 per tonne below the front-month gasoil contract, reports emerged that an unspecified buyer from Ukraine had taken delivery of crop biodiesel, with fossil diesel in some areas trading at a premium to the contract.
“We saw trains [laden with crop biodiesel] going to Ukraine… for discretionary blending and fossil diesel in the [Mediterranean, it] is already around a $50 per tonne premium to gasoil,” a European trader told Fastmarkets late on Thursday.
Ukraine, as a non-EU state, is not bound by the provisions set out in the Renewable Energy Directive (RED III) and its own road mandate — introduced only in May last year — covers gasoline blending only, with a 5% ethanol blending target.
With fossil diesel cargoes in Europe trading at a premium to gasoil, discretionary blending — or blending beyond mandated requirements — could bring down the cost of road-going diesel, as seen in the above example. But this is also dependent on the cost of blending and transportation of the fuel, Fastmarkets understands.
Tightness in fossil diesel supply into Europe has been supported by reduced volumes from the Gulf following the closure of the Strait of Hormuz, as well as the EU’s ban on Russian diesel introduced in February 2023, both of which remain unresolved.
Moreover, the dynamic of biodiesel trading at a discount to fossil diesel in the EU does not appear to be confined to Europe. US producers — particularly small-scale producers — have indicated that they could sell below NYMEX heating oil prices and still remain profitable due to strong margins. In Brazil, domestic biodiesel is now indicated at a sizeable discount to fossil diesel, according to sources.
In the EU, RED III limits the use of conventional biodiesel (whether crop- or waste-based) to no more than 7% of a given diesel blend by volume, partly because of negative impacts on engines running on higher blends.
Some studies show that blends can go as high as 10% before problems set in, and heavier vehicles such as those used for cargo transport or public transport can typically accept higher blends. Warmer climates tend to have fewer problems with this phenomenon, with Brazil and Indonesia having higher blending mandates, for example. But common acceptance in Europe of significantly higher blends such as B30 and B50 lacks consensus.
Furthermore, under the terms of RED III, EU member states aim to reduce their use of crop-based biofuels in favor of waste-based (made from feedstocks such as used cooking oil) and advanced biofuels (made from soap stock acid oil and other eligible feedstocks, for example).
Most states have a so-called “crop cap” set as a percentage of the total biofuel mandate for the road that can be reached using only crop-based biofuels, usually no higher than 5%, and often lower.
RED III provisions set a minimum 5.5% share for biofuels made from advanced feedstocks in a country’s total biofuels consumption by 2030, with some countries adopting higher targets, shifting mandated demand away from crop-based biofuels.
In the EU, biodiesel demand has been in gradual decline for some time now. The most recent data published by Eurostat for 2025 shows that imports of FAME have fallen to roughly 1.5 million tonnes from 2 million tonnes in 2024 and 2.5 million tonnes in 2023.
Much of this loss of demand for biodiesel has been taken by hydrotreated vegetable oil (HVO), also called renewable diesel in other parts of the world, such as the US.
HVO can completely replace fossil diesel if necessary and does not face the so-called blend wall that conventional biodiesel faces, being molecularly identical to fossil diesel.
This means that less of it is needed to reach national mandates in the EU, allowing mandates to be met more quickly than with biodiesel alone.
HVO is still heard trading at a significant premium to gasoil, with outright prices heard at $3,100-3,300 per tonne for products made from waste or advanced feedstocks, highlighting continued firm demand.
Our comprehensive animal feed and pet food market coverage is designed specifically for animal feed producers, pet food manufacturers, renderers and meat processors. Learn more about the products and services that make up the Fastmarkets animal feed and pet food suite.