July Pricing Analysis - European Biofuels

Every FAME-family grade rallied in flat price through July while every premium to gasoil collapsed, because the move was gasoil-led rather than biofuel-led. UCOME averaged $1,638.43/mt (+2.03% MoM, +12.75% YoY) and RME gained 13.24% open-to-close, yet the UCOME premium to low sulfur gasoil fell 18.4% to $526.41/mt and FAME 0C's fell 25.9% to $376.13/mt. The mechanism is a divergence of anchors: biodiesel flat price tracks feedstock cost while gasoil tracks distillate refining tightness, and with the implied gasoil reference repricing from $960.94/mt to $1,112.02/mt (+15.72% MoM) against UCOME's +2.03%, the premium absorbed the entire gap, $126.25/mt of it in the single session of 8 July. HVO Class II was the only grade lower month on month at $2,732.85/mt (-2.30%) as rising HVO prices pushed blenders back down the ladder to UCOME and other FAME grades, compressing the HVO premium over UCOME by $96.91/mt and repricing the HVO back curve, where M12 fell $34.25/mt while M1 rose $190.00/mt. On the cost side tallow Category 1&2 rose 5.85% on constrained supply against Category 3 at +0.11%, squeezing renewable diesel margins from both ends. Trade data confirms the positioning behind the move: activity halved to 76 trades as intermediaries flipped from net buyers to net sellers across all three grades, Trafigura selling 56% of UCOME after being June's second-largest buyer. Watch the FAME 0C gasoil premium at $242.50/mt, a monthly low set on the final trading day: sustained below $250/mt it makes FAME the cheapest compliance route and firms flat price independently of gasoil.

MARKET ACTIVITY

Intermediaries flipped from net buyers to net sellers across all three grades while producers, refiners and crushers absorbed the offer; European biodiesel activity halved to 76 trades (76 kt, all 1 kt lots) from June's 147
FAME 0C: intermediary Gunvor International took 25 of 34 trades on the bid (74%, from 16 of 60 in June), met on the offer by blender-supplier Greenergy (9) and intermediary Trafigura Singapore (11); the trade differential fell from $530/mt on 1 July to a $290/mt low on 22 July
Regime change: refiner TotalEnergies was June's dominant FAME 0C buyer at 25 of 60 trades (42%) and appears in July only on the sell side (3 trades), a complete side flip consistent with length reduction rather than continued coverage
UCOME: intermediary Trafigura Singapore sold 15 of 27 trades (56%) having been June's second-largest UCOME buyer at 22 of 65; biodiesel producer Astra Bioplant Trading SA led the bid at 10 of 27 (37%, from 9 of 65), with refiners BP (5) and Petroineos (4) behind it
Producer buying is the framework's unusual case, signaling disrupted upstream supply or a working interest in downstream margin rather than flow; it coincided with the UCOME trade differential falling from $678/mt (1 July) to $465/mt (22 July)
Blender-supplier Greenergy, June's largest UCOME buyer at 24 of 65 trades (37%), does not appear in UCOME at all in July
RME: producer, refiner and crusher selling continued to dominate the offer (BP 3, Bunge 3, MB Energy 2, ExxonMobil 2, Adnoc 2), while intermediary Trafigura fell from 14 of 22 trades on the bid in June (64%) to 2 of 15; refiner Shell led the July bid at 4 and ag-crusher Saipol bought 3
Saipol buying finished RME while Bunge and Cargill sold it is crusher-level substitution between own production and window purchase; the RME trade differential ranged $344-$540/mt against June's $489-$640/mt

PRICE ACTION

RED UCOME NWE FOB

RED HVO Class II NWE FOB Barges

Ethanol T2 NWE FOB Barges

UCOME opened $1,587.00/mt (1 July) and closed $1,695.00/mt (31 July), monthly average $1,638.43/mt against June's $1,605.80/mt (+$32.64/mt, +2.03% MoM) and July 2025's $1,453.16/mt (+$185.27/mt, +12.75% YoY); monthly high $1,724.25/mt on 27 July, monthly low $1,571.25/mt on 6 July, intra-month range $153.00/mt
RME was the strongest open-to-close performer at +$189.75/mt (+13.24%), $1,432.75/mt to $1,622.50/mt, monthly average $1,542.79/mt (+1.80% MoM, +13.39% YoY) with a monthly high of $1,661.00/mt on 17 July
FAME 0C lagged the complex at $1,488.15/mt average (+1.31% MoM, +11.74% YoY) and +3.38% open-to-close; its largest single-day fall of the month was -$74.75/mt (-4.86%) on 28 July
HVO Class II was the only grade lower on a monthly-average basis at $2,732.85/mt (-2.30% MoM, +26.22% YoY), though the path was V-shaped rather than a decline: $2,587.25/mt low on 14 July to $2,923.25/mt high on 30 July, +12.99% across 12 sessions
Ethanol T2 ran inverse to the diesel-linked grades, averaging EUR 806.40/m3 (+7.63% MoM, +33.57% YoY) but closing at EUR 737.00/m3, the monthly low set on the final trading day, -9.74% open-to-close
W3 was the breakout week across all four FAME-family and HVO grades simultaneously (RME +4.39%, FAME 0C +4.13%, UCOME +3.55%, HVO +3.19% WoW); FAME 0C weekly averages ran $1,436.58, $1,448.35, $1,508.20, $1,530.00 and $1,497.00/mt, and RME $1,482.75, $1,482.45, $1,547.50, $1,591.05 and $1,586.20/mt

CROSS-MARKET DYNAMICS

UCOME's premium to LSGO D7–D28 averaged $526.41/mt against June's $644.85/mt (-18.4% MoM, -30.0% YoY); FAME 0C fell 25.9% to $376.13/mt, RME 22.3% to $430.77/mt, and HVO Class II against ICE LSGO M1 fell 12.6% to $1,596.83/mt
Mechanism: biodiesel flat price is anchored to feedstock cost while gasoil is anchored to distillate refining tightness; backing the reference out of outright minus differential gives an implied LSGO of $1,112.02/mt in July against $960.94/mt in June (+15.72% MoM, +58.52% YoY), so with UCOME up only 2.03% the premium absorbed the difference. The derived figure reconciles across all three D7–D28 differentials independently
The 8 July session alone repriced implied LSGO +$126.25/mt (+13.31%), collapsing the FAME 0C differential $154.50/mt, UCOME $120.75/mt and RME $117.00/mt; premiums recovered partially on 9 July as gasoil eased
FAME 0C's differential closed at $242.50/mt, a monthly low set on the final trading day against a $528.50/mt open, moving blend economics decisively toward the blender and away from the producer
Diesel cracks rallied faster than flat crude on product-side tightness rather than crude scarcity, with Brent near $85/bbl and the crude curve in contango at mid-month

CURVE STRUCTURE

RED UCOME NWE FOB

RED FAME 0C CFPP NWE FOB

RED HVO Class II NWE FOB Barges

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UCOME showed bull steepening: M1 gained $200.00/mt against M12 at +$60.75/mt, widening M1-M12 backwardation from $142.50/mt to $281.75/mt, the front rallying 3.3x harder than the back
FAME 0C shifted near-parallel, M1 +$120.00/mt against M12 +$90.75/mt and M1-M12 widening only $29.25/mt; the FAME curve repriced the level rather than the structure
HVO Class II ran two patterns at once: M1-M2 flipped from +$29.75/mt to -$1.50/mt, moving the peak of the curve onto M2, while M1-M12 nearly doubled to $453.75/mt as M12 fell $34.25/mt against M1 +$190.00/mt
The HVO M12 decline is back repricing, with the deferred curve absorbing the rotation of blend demand to UCOME while the prompt held on feedstock cost; long UCOME prompt against deferred is the expression of the steepening, and HVO M1-M2 at parity removes the carry penalty on prompt storage

PRICE VOLATILITY

CV roughly doubled across every grade month on month; RME's 4.07% is the highest of the six months shown, marginally above March's 4.05%, while UCOME rose from 1.58% to 3.28% and ethanol 2.7x from 1.38% to 3.70%
The driver is gasoil pass-through rather than biofuel-specific stress: feedstock CV stayed low over the same period (UCO CIF 1.08%, tallow Category 3 1.02%), locating the variance in the product leg rather than the cost base
Hedges structured on feedstock cost will not have captured July's product-price variance; position sizing calibrated to the 1.6-2.7% CV recorded across the four biodiesel grades in May and June understates July variance by 1.5x to 2x

SOMETHING TO WATCH

FAME 0C premium to gasoil as the blend-economics trigger:
- Observation: $242.50/mt at month-end, a monthly low set on the final trading day, from a $528.50/mt open
- Why it matters: sustained below $250/mt makes FAME the cheapest compliance route against gasoil, pulling discretionary blending up and firming FAME flat price independently of gasoil; a rebound above $500/mt restores producer margin and slows blending
- What to monitor: daily FAME 0C versus LSGO D7–D28 close; ICE LSGO prompt settlement; ARA barge blending activity
Tallow Category 3 premium over Category 1&2 as the feedstock substitution canary:
- Observation: $239.76/mt in July from $291.68/mt in June, heading back toward July 2025's $193.89/mt
- Why it matters: further compression signals Category 1&2 tightness spreading into the Category 3 pool, lifting UCOME and HVO production cost across the board; re-widening above $290/mt signals Category 1&2 supply has normalized
- What to monitor: weekly Category 1&2 and Category 3 assessments; UCO CIF ARA direction; EU UCO import volumes against record exports to the US
HVO M1-M2 as back-repricing confirmation:
- Observation: -$1.50/mt at month-end, flipped from +$29.75/mt at month-start
- Why it matters: sustained front contango confirms the rotation of blend demand away from HVO is structural rather than a price spike, shifting the pattern from back repricing toward front collapse; a return above +$30/mt signals HVO demand recovered and the rotation was temporary
- What to monitor: weekly HVO M1-M2 close; HVO premium over UCOME against the $1,094/mt July average; HVO Class II versus ULSD differentials

EXTRAS

Feedstock trends

Tallow Category 1&2 rose from $910.75/mt (1 July) to $987.75/mt (31 July), closing at the monthly high, averaging $963.57/mt (+5.85% MoM) against Category 3 at +0.11%; supply issues in category 1 and 2 material reported in early July met stable category 3 cargo availability
The split compressed the Category 3 premium over Category 1&2 from $291.68/mt to $239.76/mt (-$51.92/mt), with market sources suggesting expensive UCO and vegoils could push additional interest toward animal fats
UCO CIF averaged $1,228.63/mt (+1.52% MoM, +10.12% YoY), stepping to $1,240/mt on 15 July and holding; UCO FOB averaged $1,342.07/mt (+1.78% MoM)
UCOME margin over UCO CIF widened to $409.80/mt from $395.57/mt, leaving FAME-side production economics intact through the rally
HVO Class II margin over UCO CIF compressed to $1,504.22/mt from $1,586.90/mt (-$82.68/mt) and over tallow Category 1&2 by $117.53/mt; HVO flat price fell as feedstock cost rose, squeezing renewable diesel producers from both directions
POME Oil CIF moved as a step function, $1,325.00/mt flat to 22 July then $1,370.00/mt from 23 July, averaging $1,338.70/mt (+2.37% MoM, +15.79% YoY)

Grade ladder and inter-product spreads

SME, TME and POME ME are weekly series carrying 4 July assessments each; included for ranking only
The HVO Class II premium over UCOME narrowed from $1,191.33/mt to $1,094.42/mt (-$96.91/mt) as rising HVO prices pushed blenders back to UCOME and other FAME grades despite weaker GHG credentials; demand rotated down the ladder rather than leaving the complex
FAME -10C premium over FAME 0C widened to $49.18/mt from $42.07/mt, consistent with early cold-flow coverage ahead of winter spec season
UCOME premium over FAME 0C widened to $150.28/mt from $136.96/mt, extending the waste-grade premium as UCO cost rose faster than the rapeseed-linked grades

Note: All figures, prices and market activity referenced in this report are based on the period covered by this monthly update.

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