EU tariffs could slow global pace of biodiesel production

The production of biodiesel throughout the world could reach the slowest pace seen since 2008, according to Oil World. The global output of biodiesel has been damaged by the decline in Argentine production since the EU imposed limits on exports.

The import tariffs imposed upon Argentina - the third-largest biodiesel producer in the world - and Indonesia by the EU's European Commission came as a result of the countries allegedly selling biodiesel to cheaply. The EU penalised the two production countries for biofuel 'dumping' in the 27-country bloc, following complaints from other companies in the industry that the low prices were unfair and couldn't be matched. As a result biodiesel exports from Argentina declined by 320,000 tonnes between January and April.

Argentina's production of biodiesel risks falling by 29 per cent throughout 2013, meaning a four-year low of 1.75 million tonnes being produced. In 2012 Argentina had more than tripled its production of biodiesel from 2008's figures. As a result of the biodiesel export tariffs now in place, Argentina could see a surge in the export of soybean oil - the main component of the country's biodiesel manufacture - to around 4.8 million tonnes throughout the year; according to Oil World.

Despite the plunge in Argentine biodiesel production, global production as a whole will increase - albeit at a much slower pace. Oil world has speculated that biodiesel production as a whole could increase by 4.3 per cent, in comparison to last year's figures. This would mean an overall global production of 24.4 million tonnes by the end of 2013.  

Oil World said: "As the Argentine biodiesel industry is highly dependent on exports, the severe decline of export sales so far this year has dealt a heavy blow to the industry. Biodiesel demand from the EU-27 has suffered pronouncedly from the looming decision on import restrictions."

The EU could benefit from the export tariffs against Argentina and Indonesia, with an increase of 1.3 per cent on biodiesel production in 2013, making total production somewhere in the region of 9.6 million tonnes. The US could see an increase of around 18 per cent to 3.9 million tonnes and Brazil's production could increase to 2.6 million tonnes - an increase of 8.8 per cent.