The EU biodiesel price increased by 22% m-o-m to EUR 2.18/L on 6th October. The price surged due to increases in the crude oil market, which has a positive correlation with biofuel prices, as well as a rise in the vegetable oils market which act as feedstocks. Brent crude prices on the EU Intercontinental Exchange (ICE) increased by 13.74% m-o-m to USD 82.92/MT on 11th October, while the Mintec Category Index for EU vegetable oils increased by 2.38% to EUR 1,041/MT on 22nd September.
Increasing global commitments to more sustainable energy usage has added to global demand for biofuels, with Joe Biden announcing earlier in the year that he wanted to cut emissions up to 52% of 2005 levels by 2030, double the previous target created during the 2015 Paris Treaty. However, according to Reuters, the US government has now been considering a reduction in the country’s biofuel blending requirements, triggered by a decline in gasoline demand during the COVID-19 pandemic. Consequently, this could weigh on global biofuel demand and producers’ profits. Despite this, overall biofuel prices are likely to continue pushing higher over the coming months, driven primarily by the COVID-19 recovery demand affecting both crude oil and vegetable oil markets.