Markets respond to US duties on Argentine and Indonesian biodiesel

US soyoil prices rose by 1.8%, while biomass-based diesel fuel credits also gained, following Washington’s decision to impose duties on Argentine and Indonesia biodiesel imports, according to Reuters.

The gains come as investors and industry expect an increased demand for domestic supplies following the issuing of the duties, Reuters explains.

Washington’s decision to impose duties as high as 68.28% on biodiesel imports from Argentina and Indonesia is just the latest development in a controversy which has dominated headlines in 2017.

In March, the US’ National Biodiesel Board (NBB) filed an anti-dumping and countervailing duty petition with the US government, calling for an investigation into biodiesel imports from Argentina and Indonesia. In May, NBB testified before Congress on the damage being done by the imports, and in June announced it was considering legal action against Argentina after uncovering evidence 75 million gallons of biodiesel were set to flood US ports.

Argentina and Indonesia have strongly challenged the accusations brought against them. In March, the Indonesian government submitted a complaint to the World Trade Organisation. In July, Gonzalo Ramirez Martiarena, the CEO of global commodities trader Louis Dreyfus, labelled the biodiesel dumping case against Argentina as “unjust”, and claimed he was confident Argentina would prevail.

 

Markets respond

Following the US Commerce Department’s recent decision to issue countervailing duties, Argentine biofuel producers have threatened to halt exports to the country, Reuters claims. If that happens, prices of US biodiesel would improve, in turn encouraging more production in the country.

Of the two billion gallons of biodiesel consumed in the US in 2016, imports made up over half, with most of that amount coming from Argentina.

On the 22 August, the day after the Commerce Departments’ decision, soyoil futures rallied on the Chicago Board of Trade. Prices for vegetable oil were up 0.59 cents to 34.65 cents per pound, Reuters states.

The price for a biomass-based D4 RIN diesel fuel credit reached $1.20, the highest level reached in 2017, before trimming down to $1.15, Reuters reports, citing two unnamed traders. Prior to the announcement concerning the duties, the credits were trading at $1.11.