Australian ethanol and biodiesel producers have not reported any increase in demand, despite a sharp rise in fossil fuel prices and supply disruptions caused by the war in the Middle East.
In the Asia-Pacific region, Argus' Gasoline 92r fob Singapore is currently trading $397/t above ethanol cfr Philippines, the widest premium since Argus began assessing the latter in March 2021 (see graph). UCO-based biodiesel fob Singapore is trading $436/t below gasoil 0.001pc (10ppm) Singapore — the first time mineral diesel has priced above UCO-based biodiesel since Argus launched the assessment in 2023.
Despite soaring mineral fuel prices, biodiesel producers Just Biodiesel and Ecotech, and ethanol producers Wilmar and Manildra Group, told Argus they have not seen increased demand since the war in the Mideast Gulf started on 28 February.
One producer said fuel suppliers remain focused on securing mineral fuel volumes and have not yet explored potential arbitrage opportunities. Early uptake would probably involve small blends, with fuel suppliers able to incorporate up to 5pc biodiesel and up to 1pc ethanol without notifying customers.
Australia's renewable fuel output remains comparatively small. National biodiesel capacity is around 100mn l/yr. Ethanol production was about 175mn l/yr in 2022 against a nameplate capacity of roughly 440mn l/yr, according to Bioenergy Australia. By comparison, sales of automotive mineral gasoline totalled 1,287mn l in January 2026 alone, while diesel sales reached 2,627mn l, according to Australian Petroleum Statistics.
Australia has no national biofuel blending mandate — only New South Wales and Queensland have state-level requirements for ethanol-blended petrol, and these are not strictly enforced. Queensland requires 4pc of qualifying petrol sales to be ethanol, although actual sales typically sit between 2pc and 2.5pc because of exemptions.
Wilmar Sugar renewables general manager Mark Greenwood said the company's Sarina distillery produces about 58mn l/yr of ethanol for E10 and E85 blends. Greenwood said with the right policy settings, Wilmar would consider lifting production to 63mn l/yr or more. But a stronger national ethanol mandate is needed to support investment, Greenwood said.
Manildra, Australia's largest ethanol producer, said it has not seen any material increase in demand for fuel-grade ethanol from fuel suppliers in recent weeks. Biodiesel producer Ecotech also reported no significant rise in demand. Both companies said domestic producers have available capacity that could help ease tight fuel supply.
The Australian Labor government's A$1.1bn ($770,000) Cleaner Fuels Programme framework will be released mid-year, and it is "listening" to calls for a mandate, the recent Australian Renewable Fuels Week conference heard.
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