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Court ruling buoys Argentinian hopes of 2017 return to European biodiesel sales

Argentinian and Indonesian biodiesel producers moved another step closer to regaining eventual entry to the lucrative European market. The EU’s second highest court on Thursday ruled against punitive EU anti-dumping duties on the two countries’ exporters which have kept the once nearly two million tonne trading arbitrage shut since 2013.

The European General Court backed the WTO’s earlier ruling in favour of Argentinian and Indonesian producers’ individual complaints that 2013 anti-dumping duties were miscalculated. Among other lines of attack, aggrieved producers argued the European ruling mistakenly equated Differential Export Taxes with otherwise non-existent state intervention on feedstock pricing.

Argentinian producers expect the case to drag another eight months before reaching a final conclusion. This timeline includes a two month appeal window against Thursday’s ruling, another six months for complainants to reply, followed by a further two month implementation period if the final outcome supports the WTO and EGC rulings.

A re-opening of the Argentinian biodiesel export arbitrage to Europe has potential implications for the growing US market as well as Europe’s tariff-walled market.

Argentinian producers are set to ship around 1.2mn t of biodiesel into the US federal mandate this year, with US blenders depending on imports to meet full year compliance targets.

A move to switch the existing $1/gal US blenders’ tax credit to a producers’ credit next year however would jeapordise Argentina’s northwards arbitrage, prompting producers to set their sights fully on regaining lost market share into Europe instead once RED sustainable supply chains are fully back in place.

Without a switch to a producers’ credit Argentina could become the swing supplier reconnecting the economics of the world’s two largest biodiesel markets. Current Argentinian biodiesel flat prices in the mid-$850s/t however look too high to work into the European FAME zero market once freight and standard biodiesel import taxes are included in the arbitrage calculation.

MS – 15/09/2016

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