June Pricing Analysis - European SAF

SAF Neat HEFA NWE FOB Barges fell 9.2% in June, but the move was a jet-price story, not an SAF one. Prompt SAF averaged $2,727/MT (-9.2% MoM) as Jet NWE FOB fell 18.2% on the unwinding Strait of Hormuz risk premium; the structural green premium held (-2.8%), absorbing the gap. The SAF-specific action sat in two spreads. SAF vs HVO Class II flipped from +$71/MT to -$70/MT (low -$308/MT on 18 June) as SAF fell harder than its diesel-linked sibling, re-tilting refiner allocation toward HVO. The production margin compressed 23.8% to $1,092/MT as SAF fell while UCO firmed +4.1%. The curve bear-steepened; M1-M12 backwardation narrowed to $191/MT, well below the $400-500/MT norm and signaling no prompt scarcity. Watch the SAF/HVO Class II spread: below -$200/MT refiners keep maximizing HVO; back above $0 reallocates to SAF, though EU antidumping on Asian HVO caps the response.

Price Action

SAF fell 9.2%, but jet fell 18.2%; the decline was crude de-escalation, not SAF weakness

• Open $2,914.75/MT, close $2,675.50/MT, average $2,727.18/MT vs May's $3,003.68/MT (-9.2% MoM, +34.0% YoY).
• High $2,940.50/MT (3 Jun), low $2,495.75/MT (18 Jun); range $444.75/MT was 3x May's $147.50/MT, a regime shift in range even as the average fell.
• Weekly walk: W1 $2,901 → W2 $2,847 (-1.9%) → W3 $2,571 (-9.7%) → W4 $2,615 (+1.7%) → W5 $2,664 (+1.9%).
• W3 broke the pattern, bottoming on 18 June as the Hormuz premium unwound; biggest session -$213.50/MT (-7.8%) on 16 June.
• W4-W5 plateaued at the lows rather than rebounding: the market accepted the lower jet-anchored level.
• SAF -9.2% against Jet FOB's -18.2%, roughly half as hard, because the fixed-dollar green premium does not fall with the barrel; CIF tracked FOB +$10/MT (avg $2,737/MT, -9.2% MoM).

Cross-Market Dynamics

SAF vs HVO Class II flipped to a discount as SAF fell harder than its diesel-linked sibling

• SAF vs HVO Class II averaged -$69.94/MT vs May's +$70.99/MT; low -$308.25/MT on 18 June, the same session as the SAF trough.
• Cause is relative decline: SAF -9.2% vs HVO Class II -4.6% (to $2,797/MT), as jet fell harder than the diesel complex. The inversion is a by-product of that gap.
• A SAF discount to HVO pushes HEFA refiners to maximise HVO over SAF, tightening prospective SAF supply.
• Reallocation is capped in practice: EU antidumping on Asian HVO blocks free import resupply, so the HVO-max response is only partial.
• Green premium (SAF vs Jet FOB) held at $1,699.53/MT (-2.8% MoM): the SAF-specific value barely moved, confirming a jet-driven month.

Curve Structure

Bear steepening; the front led as the whole SAF stack repriced lower with jet

• Bear steepening: M1 -$158.75/MT vs M12 -$99.75/MT; the front led as prompt SAF weakened with jet, the back held on an intact mandate view.
• Most of the move was the whole curve shifting down with jet, with the front-led tilt layered on top: predominantly a jet event, not an SAF curve story.
• M1-M12 backwardation of $190.75/MT month-end sits well below the $400-500/MT structural norm: no prompt-scarcity premium, consistent with ample prompt SAF.
• If the SAF/HVO discount pulls prompt supply, expect the front to firm and backwardation to re-steepen; M12 moves least, as the long-term view is unchanged.

Price Volatility

SAF CV jumped to 5.48% on jet-inherited turbulence; HVO Class II stayed calm

• SAF prompt CV 5.48%, up 3.8x from May's 1.44% but below April's 9.70% peak: elevated, not a record
• HVO Class II held at 2.44% while Jet ran 10.60%; SAF's volatility was inherited from jet, not shared with its sibling, reinforcing a jet-side month.
• The SAF vs LSGO 7-28d basis narrowed just 4.1% to $1,658.78/MT, a cleaner hedge this month than any HVO cross given the spread inversion.

Something To Watch

• SAF vs HVO Class II spread, the allocation gauge:
  
  • Observation: flipped from +$70.99/MT (May avg) to -$69.94/MT (June avg), low -$308.25/MT on 18 June, recovering to -$34/MT by month-end.
  • Why it matters: below -$200/MT refiners keep maximising HVO and minimising SAF, tightening prospective SAF supply; back above $0 reallocates to SAF, but EU antidumping on Asian HVO caps how far refiners can lean into HVO.
  • What to monitor: weekly SAF/HVO Class II close; HVO Class II vs ULSD close; EU antidumping developments on Asian HVO.
• Production margin, the feedstock-squeeze signal:
  
  • Observation: SAF vs Production Cost compressed 23.8% to $1,092.41/MT, low $923.50/MT on 16 June, while UCO firmed +4.1%.
  • Why it matters: a continued jet-led SAF slide against firm UCO drives the margin toward the ~$500/MT idling threshold; sustained readings there put European HEFA producers cash-negative and compound supply tightness.
  • What to monitor: UCO NWE FOB weekly close; SAF Production Cost monthly print; Germany RED III double-counting detail.
• Jet flat price and Hormuz status, the flat-price driver:
  
  • Observation: Jet FOB fell 18.2% MoM to $1,027.65/MT, low $907/MT on 18 June, as the Hormuz premium unwound; SAF followed at -9.2%.
  • Why it matters: SAF floats with jet, so a confirmed strait reopening extends the decline and pulls SAF lower, while re-escalation reverses it; the green premium, not jet, is what changes the SAF-specific value.
  • What to monitor: weekly Jet NWE FOB close; Strait of Hormuz transit and US-Iran headlines; the green premium for SAF-specific repricing.

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