April Recap - European SAF

European SAF Neat HEFA prompt averaged $2,641.49/MT in April vs $2,823.64/MT in March (-6.45% MoM) while the rest of the bio-jet/diesel complex rose: HVO Class II +3.77%, UCOME +2.73%, UCO feedstock +2.39%, LSGO +5.65%. The dominant mechanism was a same-feedstock divergence inside HEFA refineries: with HVO Class II vs ULSD widening +$78/MT MoM and SAF flipping from rough parity to a -$289/MT discount versus HVO Class II, refiners maximised HVO yield. The SAF green premium over Jet FOB collapsed -$166/MT (-12.7%); MOC activity confirmed the supply-side withdrawal with April recording 13 transactions vs 58 in March (-78%), offers vanishing after Apr 9 and the bid-offer spread inverting to +$104/m³ as Petroineos kept bidding without filling. The pattern reversed in the final week as conventional Jet-A-1 sourcing improved and compliance buyers re-entered against rising jet flat prices: SAF prompt jumped +$509/MT in 4 trading days (Apr 27-30), the Apr 27 trade at $1,280/m³ ($3,046.56/MT) anchoring the snap-back. The forward curve held in deep backwardation throughout (bull steepening: M1-M12 widened from $420.50 to $493.75/MT), signalling the market is pricing prompt scarcity ahead of expected normalisation rather than structural weakness.

Market Activity

• Activity collapsed 78% MoM (13 transactions in April vs 58 in March, only 1 cleared trade vs 17); bid/offer ratio inverted to 9:3 (3:1 buyer-skewed) from March's offer-heavy 17:24, with all 3 April offers printing in the first 9 days and zero offers from Apr 10 onwards.
  
  • Bid-offer spread inverted to +$104/m³ in April (bids above offers) vs -$143/m³ in March, signature of an offered-out market with buyers chasing.
• Petroineos was the dominant buyer in both months but with a regime shift: March 9 of 10 buy-side trades lifting Shell, BP, Total offers at $1,180-$1,240/m³; April 5 of 9 bids and only 1 completed Buy, with bid premiums escalating $875 to $1,200/m³ through the month.
  
  • Read as obligated/coverage buyer, programmatic buy-side presence consistent with mandate-driven offtake, not discretionary speculative positioning; demand was inelastic to the price decline.
• Sell-side participation collapsed: Shell pulled from 15 sell-side actions in March (10 offers + 5 sells) to just 2 offers and 2 bids in April; BP from 7 offers + 1 sell to 1 offer + 1 bid + the lone April trade (sold to Petroineos at $1,280/m³ on Apr 27, equivalent to $3,046.56/MT outright, the W5 prompt rebound captured in real time).
  
  • Asian footprint thin but present: Unipec Singapore posted one bid Apr 15; Mitsui appeared on both sides in March only, Asian SAF imports continue to flow via term, not spot.

Price Action

• SAF Neat HEFA NWE FOB Barges (prompt) averaged $2,641.49/MT in April vs $2,823.64/MT in March (-$182.15, -6.45% MoM); intra-month low $2,439.65 (W3 avg), high $3,046.50 (W5 avg), a $607/MT range, 23% of the monthly average.
• Conventional Jet NWE CIF was effectively flat (+0.15% MoM); SAF underperformance was specific to the bio leg, not a function of weak jet.
• Two regimes within the month: a 3-week grind lower (W1 $2,834 to W3 $2,440), then a snap reversal in W4-W5 ($2,537 to $3,046); the W5 +$509.45/MT move (+20% in 4 days) is anchored by the Apr 27 trade at $1,280/m³ ($3,046.56/MT).
• SAF blended grades behaved consistently with the underlying: 2% blend prompt -1.28%, 10% blend -2.00%, 50% blend -4.57%, the steeper the SAF ratio, the steeper the decline.

Cross-Market Dynamics

• Same-feedstock divergence inside HEFA capacity: SAF Neat HEFA prompt -6.45% MoM while HVO Class II prompt +3.77% ($2,824 to $2,931); HVO Class I +1.78%; UCOME +2.73%.
• HVO Class II vs ULSD CIF spread widened +$77.78/MT (March $1,553 to April $1,631), HVO got stronger versus its fossil benchmark while SAF got weaker versus jet, despite drawing on the same UCO molecule.
• Direct same-feedstock comparison (SAF vs HVO Class II prompt) flipped from near-parity (-$0.56) in March to a -$289.20/MT discount in April; intra-month low -$505.75.
  
  • Mechanism: HEFA refineries can co-produce SAF and renewable diesel and produce the higher-margin grade. With HVO Class II premiums elevated and demand reinforced by mandate-driven Annex IX changes, refiners maximised HVO output; SAF supply did not tighten on the production side because Asian imports filled the gap.
• Green premium (SAF vs Jet FOB) collapsed from $1,304.31 (March) to $1,138.66 (April), -$165.65, -12.7%; intra-month range $675.75/MT.
• Production margin (SAF Prompt vs SAF Netherlands Production Cost) collapsed -$181.23/MT MoM (-14.5%) to $1,064.45/MT, with intra-month range of $951/MT (low $709, high $1,660), feedstock costs firmed while SAF output prices fell, compressing realised refiner margins on every SAF tonne.

Cross-Regional Dynamics

• China-origin landed UCO CIF NWE premium over local UCO CIF NWE narrowed from $106.16/MT (March) to $77.57/MT (April), -$28.59 MoM; against local UCO FOB, China-origin landed CIF deepened its discount from -$6.91 to -$17.70/MT.
  
  • Read: Chinese material is becoming structurally more competitive landed in NWE; the local UCO CIF premium that previously reflected scarcity is compressing as Asian flow redirects toward Europe.
• Jet CIF vs Jet FOB barges (the import-side stress signal) widened from $32.60 to $51.39/MT MoM, intra-month max $79.25, consistent with the import-side jet sourcing constraint that gated SAF blending in W1-W3.
• Asian counterparty footprint in NWE SAF MOC: Unipec Singapore posted a single bid in April; Mitsui (Singapore desk) on both sides in March only, Asian importers participate but at low frequency, supportive of the picture that Asian SAF imports fill flow gaps via term contracts rather than spot.
• Implication: a loosening landed-feedstock cost line softens the floor under European HEFA production economics over time; combined with elevated HVO margins, this entrenches refiner preference for HVO in the near term and keeps spot SAF supply dependent on Asian imports for flow balance.

Curve Structure

• Bull steepening: M1 settlement rose $275.50/MT through April ($2,719.25 to $2,994.75) while M12 rose only $202.25/MT ($2,298.75 to $2,501.00); the front rallied harder than the back, deepening already-steep backwardation across all tenors.
• M1-M12 backwardation widened from $420.50/MT to $493.75/MT (+$73.25), the largest absolute steepening in the visible series; M1-M6 also widened (+$32.75) confirming structural and not just prompt-led move.
• M1-M2 narrowed slightly (-$28.25) as the very-front spread compressed even as the broader curve steepened, consistent with a market pricing acute scarcity through the next 6-12 months but with the immediate prompt-vs-next-month relationship easing on the W5 snap-back.
• Pattern call: bull steepening with prompt easing, the market is pricing supply tightness extending well beyond the prompt month, consistent with refiner allocation away from SAF persisting through Q3 mandate compliance windows.
• Implication: long M6-M12 vs short M1 is the position the curve is rewarding; if SAF/HVO spread normalises in May, M1-M12 should compress sharply and the steepening unwinds first at the back.

Price Volatility

• April CV of 4.07% (M1 basis) was lower than March's 6.57%, the volatility regime moderated MoM despite the headline price drama, because intra-month dispersion was concentrated in the W3-W5 round trip rather than persistent throughout.
• Both March and April CVs (6.57% and 4.07%) sit well above the November-February 1.25-1.54% baseline, confirming the elevated-volatility regime that began in March is intact, not resolved.
• December's 6.68% CV is the structural reference point, the only prior comparable reading in the 6-month series; SAF volatility now trades in two regimes (1-2% calm, 4-7% stressed) and is currently in the stressed regime.
• The volatility was almost entirely about the round trip: a 3-week sell-off followed by a 4-day rebound of similar magnitude inside a single calendar month; hedging models calibrated to the November-February calm regime are mis-sized for the current state.
• Implication: until the SAF/HVO refiner-allocation question resolves, position sizing should assume CV in the 4-7% range as the baseline; risk premiums on offtake contracts should reflect this regime-shifted volatility.

Something to Watch

• SAF/HVO Class II spread as the refiner-allocation signal:
  
  • Observation: averaged -$289/MT in April with intra-month low -$506/MT; flipped back to +$16/MT in W5.
  • Why it matters: as long as the spread sits below -$200/MT, HEFA refiners are economically compelled to maximise HVO and minimise SAF; sustained move back to +$100/MT or wider redirects refinery yield to SAF.
  • What to monitor: weekly SAF Neat HEFA vs HVO Class II spread (GX0017975) versus the W5 parity benchmark of +$16/MT.
• MOC offer count as the supply-availability canary:
  
  • Observation: zero SAF MOC offers posted in NWE FOB Barges from Apr 10 onwards; April total of 3 offers vs 24 in March.
  • Why it matters: an offered-out window is the cleanest real-time signal that producer/intermediary length is exhausted; a return of regular Shell, BP, Totsa offer-side participation signals the supply pipe is opening again.
  • What to monitor: weekly count of distinct offer makers; Shell offer presence specifically (10 in March vs 2 in April is the key indicator).
• M1-M12 backwardation as the structural-tightness barometer:
  
  • Observation: M1-M12 widened from $420.50/MT (1-Apr) to $493.75/MT (30-Apr), the steepest reading in visible history.
  • Why it matters: bull steepening with the long-end participating signals the market is pricing refiner allocation persistence through Q3, not just a prompt squeeze; sustained widening past $500/MT confirms structural shift, compression below $400/MT signals SAF/HVO allocation has flipped back.
  • What to monitor: weekly M1-M12 spread; M6 settlement direction (currently $2,668/MT) as the cleanest medium-term signal of where refiner-allocation is heading.

Note: All figures, prices and market activity referenced in this report are based on the period 1–30 April 2026.