Europe struggles to stem biodiesel import flood

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- Reuters, PARIS

Mar 9, 2018-

Rising biodiesel imports from Argentina and an expected surge in shipments from Indonesia threaten to cripple output in the European Union, the world’s top producer of the renewable fuel.

The European Union slashed import duties on Argentine biodiesel last September after Buenos Aires mounted a successful challenge at the World Trade Organisation, weeks after the United States imposed steep duties on the fuel.

The bloc is now considering whether to cut duties on Indonesian biodiesel.

Argentine soybean-based fuel is now entering the EU at much lower prices than rapeseed oil, the main material used by European producers, who say they cannot compete and in some cases are being pushed to the verge of bankruptcy.

Between August last year and January, 852,000 tonnes of biodiesel—around four times the capacity of a large EU plant—worth $617 million, were exported from Argentina to the bloc, customs data showed. Earlier in 2017, nearly all exports were heading to the United States.

Raffaello Garofalo, head of the European Biodiesel Board (EBB), said the impact of Argentine imports was already worse than expected.

“There is huge economic damage and we risk seeing many European renewable fuel producers close down in the face of these unfair import floods,” he said. The EU is the world’s largest producer and consumer of biodiesel, a fuel made mostly from vegetable oils, which is renewable and aimed at reducing carbon emissions.

EU production of biodiesel was 11.9 million tonnes in 2017, up from 11.7 million a year earlier. But consultancy Strategie Grains, which initially said output would be stable this year, has cut its 2018 estimate to 11.6 million tonnes because of the Argentine imports.

Imports of Argentine biodiesel into the EU could hit 1.5 million tonnes in 2018, with a similar volume from Indonesia if the EU cuts its duties, Strategie Grains said.

The rise in imports comes as several producers in the European Union are being pressed hard by internal competition and low margins.

The EU’s top producer, Saipol, part of oilseed group Avril, said it would cut production by nearly half this year, with around 250 out of 600 staff working reduced hours, mainly because of imports of Argentine biodiesel. “There is a double impact, on our sales but also on the biodiesel market, where prices are weighed down by the arrival of cheap products,” Kristell Guizouarn, head of France’s biodiesel industry group Esterifrance, said.

Both Argentina and Indonesia impose a higher export duty on the raw material—soybeans and palm oil respectively—than on biodiesel. This allows biodiesel producers in the two countries to “dump” products abroad at unfairly low prices, EU producers say. 

Since September, European rapeseed oil-based biodiesel prices have fallen 12 percent but are still about 25 percent higher than Argentine soybean oil-based biodiesel delivered to the bloc. 

Published: 09-03-2018 09:18

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