Biofuels and feedstocks
Overview
Demand for biofuels is increasing significantly, driven by the need to decarbonise road transport as part of the energy transition. Global biofuels output is expected to rise by more than 3mn b/d in the next five years, and such rapid growth means that new challenges and opportunities are constantly emerging. Keeping on top of the ever-changing biofuels landscape requires accurate pricing, insightful analysis and access to the latest data.
The Argus biofuels solution provides in-depth pricing and market analysis across the entire global renewable fuel supply chain, from original feedstock to finished fuel, with prices and key insights into regional biodiesel, ethanol and feedstock markets.
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Rhine oil barge rates at record on near-impassable Kaub
Rhine oil barge rates at record on near-impassable Kaub
Hamburg, 30 July (Argus) — Freight rates for barges carrying oil products on the Rhine have hit an all time high because low water levels have left the river's Kaub bottleneck practically impassable and have rendered limited shallow draft barge resupply uneconomical. At the start of the week, the Kaub bottleneck on the Rhine fell below the critical 30cm mark, making the route impassable for most inland barges. Shipowners said only a few specialised vessels with shallow drafts can still pass, but these are typically tied to long-term charter agreements and crews require considerable experience and detailed knowledge of the shoals around Kaub to navigate safely. The Upper Rhine and Main River are now practically cut off from the Amsterdam-Rotterdam-Antwerp (ARA) trading hub. The same is true for Switzerland, which heavily relies on imports of oil products from ARA via the Rhine. Problems may soon extend to the Lower Rhine. Barge loading operations are at risk of being suspended at the beginning of the week ending 7 August, as a result of extremely low water levels. The water level at Duisburg is forecast to reach a historic low by the end of the current week, which would make vessel loading impossible and potentially cut the direct route from ARA to the 251,000 b/d Gelsenkirchen refinery. Barges transporting oil products or blending components to and from the refinery switch from the Rhine to the Ruhr River at Duisburg, then reach Gelsenkirchen via the Rhine-Herne Canal. If water levels at Duisburg fall as expected, loading restrictions will make such shipments uneconomical or impossible, traders said. Shipowners have been raising freight rates for shipments from ARA to destinations along the Rhine and Main since mid-June, with the pace of increases accelerating in the second week of July. Freight rates to Duisburg, Frankfurt and Karlsruhe have now reached record highs since assessments were launched in 2012 (see chart). Only rates to Cologne and Basel were higher once before, in August 2022, when low Rhine water levels coincided with maintenance at the Gelsenkirchen refinery and production issues at Austria's 193,700 b/d Schwechat refinery. When barge resupply and outbound shipments become difficult or impossible, rail transport appears to be an alternative. But traders and shipowners said there is very little spare capacity for additional rail shipments. Many market participants are seeking alternatives to barge transport at the same time, further tightening rail availability. Price gaps Severe disruption to resupply logistics and higher freight rates are causing price increases at import hubs in western Germany compared with refinery locations. Suppliers at the 310,000 b/d Miro refinery in Karlsruhe can no longer ship relevant volumes of surplus product by barge to other destinations or ARA. As a result, they are lowering prices for truck loadings of heating oil, diesel and gasoline to reduce excess inventories. The disconnect between import and refinery markets has reached almost unprecedented levels. Heating oil, diesel and gasoline in the Rhine-Main region are trading way above prices at Miro (see chart). Gasoline is increasingly difficult to source on the spot market in Rhine-Main, the Cologne region and western Germany. Many suppliers have withdrawn from the spot market, likely because low water levels are preventing adequate supplies of blending components, making normal gasoline production impossible. By Johannes Guhlke fca truck loading Rhine-Main area vs. Miro Argus Rhine freight rates from ARA to Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
US tariffs to cut Brazil's tallow exports
US tariffs to cut Brazil's tallow exports
Sao Paulo, 29 July (Argus) — New US tariffs are expected to curb Brazilian beef tallow exports to its largest overseas market, increasing domestic availability and potentially channeling more supply into biodiesel production. Brazilian beef tallow now faces a combined 37.5pc import tariff into the US, comprising a new 12.5pc duty imposed by the administration of President Donald Trump on 24 July and an existing 25pc tariff on Brazilian imports effective since 22 July. The feedstock has lost its competitive edge in the US Gulf coast market, which is a major demand center. Including beef tallow costs, freight costs for cargoes of up to 5,000 metric tonnes (t), the recently imposed tariffs and the value generated by the 45Z clean fuel production tax credit — which could be viewed as an additional cost since it only applies to US domestic feedstocks — imported Brazilian tallow carries an effective cost of around $1,936/t, according to Argus calculations. By comparison, US tallow at the US Gulf coast is available at roughly $1,700/t. Market participants expect only limited volumes of beef tallow to continue flowing to the US, primarily to producers that can take advantage of duty drawback provisions. These provisions allow some renewable diesel and sustainable aviation fuel (SAF) producers to recover duties paid on imported feedstocks when the finished fuel is subsequently exported to destinations such as Canada, Europe and other international markets. 1H export drop Brazilian tallow exports had fallen by approximately 40pc to 141,000t in the first half of 2026 from the same period in 2025, according to trade ministry Mdic data. This reflected the impact of previous US import tariffs, which created market uncertainty and disrupted trade flows to the product's primary export destination. Brazilian beef tallow prices are trending downward as export demand weakens following the closure of the US arbitrage. Further losses, however, are likely to be limited by production costs and slower cattle slaughter rates after Brazil filled its beef export quota to China, reducing tallow output. A drop in the price of the feedstock material will be insufficient to reopen the arbitrage opportunity to the US in the short term, according to traders. Falling beef tallow prices are likely to boost demand from biodiesel producers with the flexibility to process waste-based feedstocks. Tallow in Brazil's central-western Mato Grosso state is currently priced at R5,150 ($1,009)/t, a discount of R625/t to soybean oil, according to Argus indicators published on 24 July. But demand for the biofuel is not reacting as expected, given the backdrop of the conflict between the US and Iran, which has driven up fuel prices and altered economic dynamics worldwide. External demand With Brazil facing the highest tariff burden, US biofuel producers could increasingly turn to alternative sources of tallow, including Australia, New Zealand, and potentially Europe and other South American countries. More favorable tariff treatment for Asian suppliers could also support continued imports of used cooking oil (UCO) into the US, displacing some demand for tallow. But UCO arbitrage opportunities have narrowed in recent weeks, as the spread between origin markets and the US Gulf coast has become less attractive than it was in June. The US Environmental Protection Agency (EPA) finalized its record-high 2026 and 2027 biomass-based diesel blending mandates in March, covering renewable diesel, biodiesel, and SAF. The 2026 mandate represents a 60pc increase from the previous year, with targets set at 9.07bn renewable identification numbers (RINs) for 2026 and 9.20bn RINs for 2027. The announcement removed much of the uncertainty that had weighed on the industry throughout 2025 and provided a clearer demand outlook for biofuel feedstocks in the US. The higher mandates translated into stronger demand for feedstocks such as tallow on the US Gulf coast, where prices climbed to a record high of $1,995.81/t on 3 June. Elevated domestic prices opened arbitrage opportunities for imports during the first half of the year, supporting a recovery in overseas shipments. Although US tallow imports have yet to exceed their historical highs in 2026, they have rebounded significantly from lower levels early in the year. The recovery had boosted confidence among overseas suppliers, who expected import demand to continue strengthening through the remainder of 2026. But the new tariff measures have added fresh uncertainty to that outlook, raising questions about future trade flows and the competitiveness of different supplying regions. This has renewed attention on Europe as a potential destination for Brazilian tallow. European traders do not expect the US tariffs on Brazilian tallow to result in a significant increase in imports into the EU. Market participants had explored diverting Brazilian volumes to Europe when US tariffs reached 50pc in the second half of 2025, but shipments were limited, partly because veterinary approvals, certification requirements and border controls restricted market access. As a result, only small volumes arrived in early 2026 despite concerns over a potential influx. The latest 37.5pc tariff is therefore unlikely to change trade flows materially. Although Spain's RED III implementation is expected to support category 3 demand from 2027 by rewarding greenhouse gas emissions savings and leaving category 3 outside the 1.7pc Annex IX Part B cap, traders said freight costs, high energy prices and regulatory hurdles continue to prevent a viable Brazil-Europe arbitrage. Some market participants instead expect lower US imports from Brazil to support European exports to the US. Most European suppliers to the US do not expect an immediate impact from the latest tariff measures, noting it is too early to assess any shift in trade flows. Under EU animal-by-product rules, tallow is classified into categories 1, 2 and 3. Categories 1 and 2 are recognized as waste feedstocks under RED III Annex 9 Part B, while category 3, although not listed under Annex 9, remains an established biofuel feedstock. Typically, lower-grade category 3 tallow with 10-15pc free fatty acid (FFA) content is exported to the US, while higher-quality material with 5pc FFA or below is consumed within Europe. By Natalia Dalle Cort, Beatriz Pacheco, Anna Prokhorova and Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Spanish HVO Class III demand to rise under RED III
Spanish HVO Class III demand to rise under RED III
London, 29 July (Argus) — Spain's newly adopted mandate implementing the EU's recast renewable energy directive (RED III) is expected to support demand for HVO Class III from 2027, traders said. Hydrotreated vegetable oil (HVO) Class III is made from category 3 tallow. On an EU level, RED III requires member states to achieve a 14.5pc reduction in greenhouse gas emissions from transport fuels or a 29pc share of renewable energy in transport by 2030. Under the directive, biofuels produced from feedstocks listed in Annexe IX can be double counted towards compliance with renewable energy-based mandates. But double counting does not apply under GHG-reduction mandates. There is a sub-target for Annexe IX Part A feedstocks such as palm oil mill effluent oil, while Annexe IX Part B feedstocks such as used cooking oil (UCO) are capped. Spain adopted a GHG reduction mandate in its RED III transposition, effectively ending the practice of double counting in meeting national biofuel obligations. As a result, obligated parties will need higher absolute volumes of renewable fuels to meet GHG reduction quotas, supporting demand for drop-in fuels such as HVO. In Spain, biodiesel blending is capped at 7pc and ethanol at 5pc. HVO can be blended at up to around 20pc into diesel while still meeting fuel standards. Strategic reserves agency Cores estimates demand for biofuels blended into diesel in 2025 at 1.92mn t, corresponding to a blend rate of 8.7pc by volume. It implies that around 40pc of biofuels blended into diesel in 2025 were double counted. Argus Analytics estimates Spain's HVO demand in 2025 at around 715,000t. Spain's new legislation also raised the sub-target for Annexe IX Part A biofuels from 1pc to 1.2pc, while retaining a 1.7pc cap on those made from Annexe IX Part B feedstocks. Category 3 tallow is not included in Annexe IX and is not eligible for double counting in any EU member. As a result, HVO Class III has typically traded at a discount to waste-based grades such as UCO-based HVO (HVO Class II), which generally also offers greater GHG savings — category 3 tallow offers GHG savings of around 72-82pc, depending on assumptions and yields, compared with about 85-90pc for UCO. Argus currently assesses Class II at a minimum of 85pc GHG savings and Class III at a minimum of 80pc. But with Annexe IX Part B feedstocks capped and double counting no longer available under Spain's GHG-based mandate, compliance value will be increasingly driven by GHG performance. For obligated parties, this will leave the higher GHG savings of HVO Class II as its main advantage over Class III, potentially narrowing the value gap between the two grades and improving Class III blending economics. Spain's producers are ready Spain's HVO production capacity, including standalone hydrotreatment units and co-processing facilities, totals about 900,000 t/yr. Repsol accounts for around 722,000 t/yr through two hydrotreatment plants and one co-processing unit. The producer regularly imports category 3 tallow to its hydrotreatment plant in Cartagena, according to ship-tracking data. Moeve operates two co-processing plants with combined capacity of roughly 86,000 t/yr and is set to add 500,000 t/yr of HVO and sustainable aviation fuel (SAF) production at Huelva in late 2026 or early 2027. BP also produces HVO through a co-processing unit, with capacity of about 109,000 t/yr. Further capacity is on the way, with Dreexo Energia and Alfa Laval expected to start up a 100,000 t/yr hydrotreatment plant next year. Beyond Spain Germany is already providing additional support for HVO Class III demand. The country recently decided to allow category 3 tallow under its GHG mandate from 2026, subject to a restrictive 0.3pc cap. Germany adopted RED III in April and retroactively ended double counting for Annexe IX biofuels in 2026. Since that change and with both biofuels capped, HVO Class II and Class III have increasingly been valued on a similar basis for compliance in Germany, depending on their respective GHG savings, traders said. Obligated parties would be expected to blend as much HVO Class III as possible before reaching the cap. The Argus HVO fob ARA Class III/II spread narrowed to around $15/m³ on 22 May, its tightest since 12 August 2025, which many market participants attributed to the policy change. This compares with an average spread of $72/m³ in 2025. Together, the Spanish and German policy changes could encourage greater movement of category 3 material beyond its traditional demand hubs in northern Europe. The wider European picture remains mixed. The Netherlands already limits incentives for category 3 tallow-derived biofuels, while France has proposed a 0.6pc cap from 2027 to avoid diverting material from other users such as the pet food, feed, oleochemical and pharmaceutical sectors. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Indonesia sets biodiesel production volumes for B50
Indonesia sets biodiesel production volumes for B50
Singapore, 29 July (Argus) — The Indonesian ministry of energy and mineral resources (ESDM) has today allocated production volume targets to domestic biodiesel producers to implement its 50pc fossil diesel-biodiesel blend (B50) mandate, according to a document seen by Argus . ESDM has allocated a total of 16.7mn kilolitres (kl) across 26 biodiesel producers for 2026 to fulfill the B50 mandate, up from 15.6mn kl allocated at the start of the year for its original B40 target. Biodiesel producers had been awaiting updated volume allocations under the new B50 target for most of July , despite the mandate officially taking effect at the start of the month . Of the total allocated volume, the ministry has instructed producers to supply 8.2mn kl of subsidised biodiesel volumes to the public service obligation (PSO) sector — targeted at public transportation, public services, agriculture and micro-enterprises. The remaining 8.5mn kl must be supplied to the non-PSO sector — including commercial industries, private transport, general mining, manufacturing, and power plants. Indonesian plantation fund management agency BPDPKS funds the price gap between biodiesel and fossil gasoil using revenue from export levies on palm oil and related products, for biodiesel delivered to the PSO sector. It delivers the funds to biodiesel producers after they supply biodiesel to fuel distribution companies at the cost of regular gasoil. Fuel distributors then supply blended biodiesel and gasoil to consumers. By Malcolm Goh Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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