Asian used cooking oil (UCO) suppliers have met significant obstacles when trying to register under an online platform that the European Commission will soon require for all UCO importers to the bloc.
Market participants expect Asian UCO trade to Europe to slow down as the deadline looms for UCO sellers to register as suppliers of "animal by-products" under the Traces-New Technology (Traces-NT) system, as they were asked to do in a system notice in December.
Among the thousands of UCO suppliers in Asia-Pacific, only one Taiwan-based seller has been fully registered under Traces-NT, market participants told Argus. No Chinese, Malaysian or Indonesian entities have been successfully enrolled on the platform for selling UCO.
Completing registration requires local authorities in the supplier's country to approve and add suppliers to the Traces-NT system. Chinese customs require companies to provide proof of having a veterinary health and epidemic prevention mechanism in place before they will approve them, according to a local customs office checklist seen by Argus. But no UCO sellers have been able to get the required veterinary sign-off so far. Authorities do not allow government vets to give this attestation for UCO cargoes, many participants said.
Indonesian exporters are facing even greater hurdles, as the "animal by-products" category for their country has not been created yet on the platform, a supplier said.
They also expect Indonesian authorities to drag their feet on approving UCO sellers for shipping to the EU, as officials have previously suggested limiting UCO exports to boost supplies of the feedstock for domestic biofuel production.
Spain is set to require all suppliers to be registered with Traces-NT from 1 June, while sellers to Belgium must be up to date by 30 May. The Netherlands has said it will delay implementation beyond this but has yet to give a specific deadline.
Some Asian suppliers said they have continued to offer and export UCO unhindered for the time being despite not completing registration. But market news that Asian UCO cargoes were stopped at Spanish ports last week and questioned on their lack of Traces-NT clearance have caused some participants to be concerned.
UCO had completely stopped trading in east China last week because of this issue, as well as weak exporter margins, a tank storage provider said.
Silver linings
The slowdown in Asian UCO arrivals will likely tighten supplies and boost prices in the EU market.
Argus assessed UCO ex-works Netherlands at a three-month low of $1,191/t on 8 February. Stronger feedstock prices may also be a boon for finished biodiesel UCO methyl ester values, which have come under pressure since the start of this year and touched a near two-year low of $1,488/t on 30 January on a fob Amsterdam-Rotterdam-Antwerp basis.
Asian biofuel producers may also benefit from higher feedstock availability within the region, as sellers seek alternative markets for their products to stay clear of Europe's red tape.
