• S&P Global Platts cited sources as saying that a Chinese company has provided a means for buyers to import T2 FAME (fatty acid methyl esters) from China without the risk of backdated duties. A European producer said that they are chartering vessels to bring the T2 product into Europe, taking the risk of custom clearing and distributing the product to European buyers, being a buffer for potential anti-circumvention duties. On 17 August, the European Commission (EC) launched an investigation into the potential circumvention of the duty, prompted by concerns that the product was being re-routed through China and the UK. A source said that while there was little concrete information on when the EC investigation will conclude, there is a deadline in which the commission must respond. They are expecting the end of 1Q2024 for the initial response.

• In a related development, Transport & Environment said that Europe currently imports fourfifths of the used cooking oil (USO) that it uses as fuel for cars, trucks and planes. The vast majority (60%) of the imports come from China. High demand for USO has raised the risk of fraud, where virgin oils like palm oil are suspected of being mislabelled as “used” to take advantage of inflated value of the green fuel. China is the continent’s largest supplier of UCO accounting for 60% of imports and 40% of Europe’s total UCO supply.

• Bloomberg reported that India has eased the rules that prohibited sugar companies and distillers from making ethanol from cane juice. State-run energy companies will revise the allocation of quotas to buy ethanol made from cane juice and molasses according to a food ministry notification dated 15 December. The latest guidance follows a directive this month to domestic sugar mills and distilleries to stop using cane juice and syrup to produce ethanol in 2023E/2024F to allow the country to boost reserves of the sweetener.

• According to Bloomberg also, the Biden administration has unveiled a long-awaited sustainable aviation fuel plan that appears to provide a path for makers of corn ethanol and other crop-based biofuels to claim valuable tax credits. The Treasury Department said that the green jet fuel guidance will include a revised version of the Energy Department’s emissions-measuring method known as GREET, which is a model for calculating greenhouse gas emissions backed by ethanol makers. While final details of how greenhouse gas emissions from producing sustainable aviation fuel will only be unveiled next year, the inclusion of GREET is seen by the ethanol industry as a step in the right direction.

• Bloomberg reported that Argentina’s government wants to hike taxes on exports of soybean meal and soybean oil by 2 percentage points as part of an aggressive push to balance the budget. The tax increases, which need to be approved by the lawmakers, would place the rate at 33% each for soybean meal and oil, up from 31%. The timing could not be worse for Argentine crushers, who have run out of supplies after a crippling drought. According to the Rosario Board of Trade, there are just 1.9mil tonnes of physical soybean stocks left to sell. The next harvest does not come until 2Q2024.

Source: AmInvest Research - 26 Dec 2023