Latin American biodiesel producers are delaying investments in the maritime sector as the shipping industry awaits a decision on the International Maritime Organisation's (IMO) proposed Net-Zero Framework (NZF).
A supplier on Latin America's Pacific coast cancelled plans to deliver palm oil-based biodiesel to Peruvian and Ecuadorian ports. Other regional producers have also postponed projects targeting the biobunker market.
Marine biodiesel demand in 2026 has been estimated to be at least two-thirds lower than in 2025, Latin American suppliers told Argus. In the absence of a global regulatory driver, and following heightened US-Iran tensions, vessels calling at regional ports have focused on purchasing the lowest-cost fuel and not straying from more conventional fuel options.
Suppliers said current demand in Latin America does not justify investments without global shipping emissions regulations. Competing for European demand is not financially viable because biodiesel prices in Rotterdam are much lower than in US ports. Europe remains the main demand centre as shipowners must comply with FuelEU Maritime and Renewable Energy Directive (RED) requirements.
Argus assessed B30 advanced fame and VLSFO delivered on board (dob) Netherlands at an average price of $877.50/t in the past 30 days. Argus' B24 advanced fame and VLSFO dob Rio Grande — was assessed at an average price of $1,094/t in the same period. Argus currently only assesses B24 advanced fame for the Latin America market instead of B30.
Market participants are waiting for regulatory clarity to expand production and supply, but agreement on IMO's NZF still appears distant. Limited progress was made at the Inter-sessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 22) meeting on 1-4 September, which involved more than 1,200 delegates and contributors.
The issue was deferred to the next inter-sessional meeting on 23-27 November, shortly before the extraordinary Marine Environment Protection Committee session from 30 November to 3 December in London.
Discussions continued outside the formal meeting. Countries broadly agreed that the current draft should remain the basis for negotiations, but a group of member states is seeking to remove provisions covering the Net-Zero Fund. Market participants doubt the NZF will be approved this year.
Shipowners' association Bimco said there were some signs of willingness to compromise at ISWG-GHG 22, but disagreements over the framework remain significant, making convergence challenging and raising doubts over whether a revised proposal can emerge before MEPC 85 in early December. SEA-LNG also described the scenario for approval later this year as "challenging".
But one Brazilian delegate said he remains optimistic about the negotiations and expects "substantial progress" at ISWG-GHG 23.
