Argus Launches New B30 Ucome ARA Price

by Hussein Al-Khalisy (Argus Media) Argus has launched B30 Ucome dob ARA range marine biodiesel blend assessments, replacing a calculated fob ARA range blend price. The assessment will comprise 30pc used cooking oil methyl ester (Ucome) and 70pc very-low sulphur fuel oil (VLSFO).

Trade of marine biodiesel blends in northwest Europe has been impacted by changes to domestic policy in the Netherlands. Advanced fatty acid methyl ester (Fame) blends comprised a significant share of total bio-bunkering in the ports hub, driven by the value of renewable fuel tickets that are generated by the blending of biofuels.

HBE-G tickets, a class of Dutch renewable fuels tickets, or HBEs, are used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty/energy tax on fuels.

HBE-Gs relate to the blending of ‘advanced’ biofuels, made from feedstocks listed in Annex IX Part A of the EU Renewable Energy Directive (RED II). These tickets are tradable and count double towards transport mandates, enabling marine biofuels blenders to claim back value against they sales of physical product.

Total biofuel blend sales in Rotterdam had firmed to about [11pc of total bunker sales in the final quarter of 2023]( Rotterdam bunker fuel sales drop | Argus Media), the largest share since Rotterdam started publishing biofuel blend figures.

In 2023, a blender would receive HBE-Gs worth 0.8 times the energy content of the biofuel component of a marine blend prior to double counting, in effect ensuring a return of 1.6 times. But for 2024 the Dutch government reduced the multiplier for biofuels in maritime shipping to 0.4 starting in 2024, effectively halving the value of the practice. This, to an extent, offers a more level playing field to bio-bunkering using biofuels not considered as advanced.

The decision came following a public consultation that was launching in early September, where Dutch market participants had been reportedly supportive of the change according to the Ministry for Infrastructure and Water Management. This drastic change translated to the largest increase over a single trading session for the Argus B30 advanced fame 0°C CFPP dob ARA blend, rising by [$81.97/t on 2 January]( ARA B30 prices firm as HBE-G multiplier halves | Argus Media).

Ucome blends, produced from Annex IX Part B listed used cooking oil (UCO) qualify under a different ticket class — HBE IXB — which are not eligible for marine blending to meet local transport targets. But more broadly, a cheaper biodiesel that has a high greenhouse gas savings, Ucome is an attractive option for shipping companies that seek greener bunkering options.

Marine biodiesel demand has been supported by broader regulations such as IMO’s Carbon Intensity Indicator (CII) which was implemented in 2023, as well the EU’s [Emissions Trading System (ETS)] this year.

Market participants have reported firming buying interest for B30 Ucome and VLSFO blends in ARA in recent weeks, predominantly in Antwerp, Belgium — where the HBE-G ticket system does not apply, but also in Rotterdam, as well as an increase in liquidity.

Contrasting with firming demand, supply concerns further upstream have caused a tightness for maritime blends as well. Dutch imports of used cooking oil (UCO) and biodiesel from Asia-Pacific fell to 87,000t in January from 112,000t a month prior, according to Kpler, and 114,000t in January last year.

This follows tanker traffic disruption in the Red Sea and has resulted in significant delays to vessels arriving at European ports — up to 15 days — as well as firmer freight rates.

Supply concerns are exacerbated by an EU [anti-dumping] investigation into Chinese biofuel exports, which contribute significantly to regional supply of waste-based products such as Ucome.

And last week's news that the European Biodiesel Board (EBB) retracted a proposal to the European Commission on a separate investigation into the [potential circumvention of trade measures] against Indonesian biodiesel through China and the UK was quickly met with a European Commission announcement that it could [proceed] regardless.

Advanced Fame biofuel blends in Rotterdam were assessed at a discount to biofuel blends in Singapore in 2023, particularly to the most common marine biofuel B24 blend, which comprises Ucome and VLSFO. Rotterdam prices had a competitive edge thanks mainly to the Dutch HBE-Gs subsidies, whereas in Singapore there were no incentives for biofuel use in the marine sector.

The Dutch government’s decision to halve subsidies for marine bioblending from 2024, plus the inclusion of shipping in the EU ETS system, resulted in B30 (Advanced Fame & VLSFO) dob ARA with added CO 2 costs flipped to a premium to B24 (Ucome $VLSFO) dob Singapore in January. And the spread is forecast to widen further in 2024.

From 1 January 2024, ships with a gross tonnage of over 5,000t calling at EU ports must secure emissions trading system (ETS) allowances to cover their greenhouse gas emissions. Shipowners are liable for 40pc of emissions this year, 70pc in 2025 and 100pc from 2026. Emissions are counted on fuel used for a full voyage within the EU, or for half the voyage if it begins or ends at a non-EU port. At an EU ETS CO 2 price of $65/t from 1 February, this would add $57/t to the price of B30 (Advanced Fame $ VLSFO) dob ARA this year and $100/t in 2025.