Report discusses Argentine biodiesel industry

By Anna Austin | April 15, 2009
The Argentine Renewable Energies Chamber has updated its report of the current state of the Argentinean biodiesel industry, covering the past six months.

Although Argentina is among the top five biodiesel producing countries in the world, it is only operating at about half of its total installed capacity, the report found. Total industry production reached 1.07 million tons (319 million gallons) in 2008, with sales in excess of $1.3 billion.

The AREC said that estimates made last October of total 2008 production of
1.2 million tons (358.8 million gallons) was not met because beginning that month, a rapid decline in demand and pricing took effect. "Some of the reasons behind this can be explained away with the softening of global economy and concurrent falling commodity prices, as well as by the decisions of the European Union that have taken measures to protect their internal markets – but which increasingly appear headed towards protectionism," the report stated.

The EU has imposed temporary anti-dumping and anti-subsidy duties on imports of biodiesel from the U.S., which came into effect on March 13, and will be in place for four months while the investigation and contacts with stakeholders continue. The level of the measures, which are applied together, is set at between €211.20 to €237.00 ($271.22 to $304.35) per ton for the anti-subsidy duties and between €23.60 and €208.20 ($30.31 to $267.31) per ton for the anti-dumping measures. This has slowed demand for Argentinean biodiesel, as biodiesel acquired by industry traders has typically been in the U.S., where it qualifies for US tax subsidies (reimbursements of $1 per gallon or $300 per ton), and is then re-exported to Europe.

Given that at present the price of biodiesel placed in Rotterdam, Netherlands, is near US$800/ton, these additional tariffs are a hard blow to the U.S. biodiesel industry –but may represent an opportunity for Argentine biodiesel, especially the more established ones, according to the AREC.

In order to launch a domestic biodiesel market, the AREC proposes to accelerate the start date of the B5 mandate for domestic market by July 2009, to permit Argentine biodiesel producers –currently allowed only to export production- to supply domestic market for a temporary period; and to create a biodiesel stabilization fund with a goal of reducing price volatility for the domestic market.

A free copy of the report, which also discusses the EU's moves to limit the entry of soy-based biodiesel and domestic market data, can be viewed here.
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