October Pricing Analysis

Summary

The month of October saw Asia biofuels move contrary to the fossil fuels complex. Front-month Singapore jet rose 3.2% MoM and gasoil 10ppm fell 2.7%, yet SAF fell 18.4% and HVO Class II 8.6%, indicating that biofuel demand may have faltered across the month as European SAF mandate requirements will have been fulfilled towards the end of the year. Feedstock and modelled production costs remain steady on month, implying that producer margins may have been compromised by lower demand.

Price action

Product trends

SAF Neat HEFA Malacca Straits FOB averaged $2,293.93/MT in October, -18.4% MoM (-$517.98) and -14.6% YoY, the lowest monthly average seen since February 2026.
HVO Class II Malacca Straits FOB averaged $2,637.68/MT, -8.6% MoM (-$247.64), also its lowest since February, though still +4.0% YoY.
HVO Class IV averaged $2,966.51/MT, -11.8% MoM and +15.6% YoY. It closed at $2,884.50 from a $3,318.00 open.
SAF fell hardest in the first half of the month while jet remained rangebound, though both products flattened out over the last two weeks. Asian SAF which prices largely as an export barrel into Europe due to the ReFuelEU remains sensitive to fundamentals in Northwest Europe. Weaker European pull showed through the export chain, with Chinese UCOME netback from NWE compared against the UCO feedstock cost nearly attained parity.

Feedstock trends

UCO Straits FOB averaged $1,183.00/MT, -1.1% MoM (-$13.25) and +7.4% YoY while UCO East China averaged $1,198.00/MT, flat MoM (+$0.50). The difference in price can be attributed to stronger Chinese demand as SAF production capacity grows, with both Henan Junheng Biotechnology’s SAF plant expansion and PetroChina Huabei’s 100kt HEFA SAF unit expected to be completed by late 2026. Straits UCO is also affected by the downward trends of local crude palm oil in the region, which competes with UCO as a bio feedstock.
CPO Singapore Straits FOB (USD) averaged $1,119.19/MT, -3.3% MoM (-$38.54) and saw a brief high at $1161.25/MT on 23 Oct before easing to the end of the month at $1143.85/MT. The surge towards the middle of the month likely drew strength from stronger Indonesian palm oil demand as Indonesia’s B50 biodiesel program mandated all gas stations to sell B50 palm oil biodiesel by October 1. Prices tapered off towards the end of the month due to weaker performance by rival edible oils and concerns over rising October Malaysian palm oil inventories.

Production margins

Modelled HVO HEFA (UCO) production cost averaged $1,869.59/MT (+0.6% MoM) and SAF Neat HEFA (UCO) $1,963.31/MT (+0.8% MoM).
Against UCO Straits feedstock, the spreads were +$686.59/MT and +$780.31/MT, both up 3.8% MoM. Cost held while UCO eased, so the non-feedstock components carried more of the cost this month.

Cross-market dynamics

Weaker demand meant SAF was unable to capitalise on stronger jet market over September and a narrowing green premium.

The HVO green premium (HVO Class II minus gasoil 10ppm) averaged $1,348.47/MT vs September’s $1,560.88/MT (-13.6%), starting the month at $1,435.61/MT and ending at $1,375.67/MT. The premium has now narrowed for two consecutive months.
The SAF green premium (SAF minus Singapore jet) averaged $915.55/MT vs September’s $1,476.11/MT (-38.0%). It fell from $1,136.32/MT on 1 Oct and $933.16/MT on 30 Oct, as SAF fell while jet held above $1,300/MT.

Something to watch

Malaysian Palm Oil Board (MPOB) releases of October stocks numbers in November will provide a clearer picture on the palm oil oversupply
Announcements on the startup of Henan Junheng Biotechnology and PetroChina’s SAF plants will further strengthen domestic demand for UCO