Countdown for 2%: Europe's SAF price eases as mandate deadline looms

Europe's on the final approach in its inaugural year of Sustainable Aviation Fuel (SAF) mandates. Suppliers have only a few weeks left of 2025 to ensure compliance with the 2% blend requirement in the EU and UK. Price signals suggest the market thinks this will be achieved.

Prices ease after a brief rally

SAF NWE FOB Barges flirted with but did not quite reach $3,000/mt this month. General Index data shows SAF prices decreased from $2,978/mt on 18 Nov to $2,638/mt on 27 Nov. The aviation fuel complex has been partly hostage to diesel's supply-side bullish fortunes, but those concerns have eased in recent days.

SAF is a nascent sector and liquidity in the traded spot market underpinning pricing is thin, so prices can turn on a dime -- as the upswing over the summer demonstrated (see our blog from September). For now at least, the decline doesn't point to expectations of a last-minute rush into the spot market to source SAF to top up mandate obligations.

Spot market activity picks up, but no panic buying yet

In a possible sign of SAF short covering, four spot trades were reported publicly over the past month on SAF NWE FOB Barges, the first since July. BP reacted to bullish bidding to sell thrice to Petroineos on the ascent. BP later bought a Shell offer when the market was receding from its peak.

Pricing may also indicate there is sufficient supply reasonably close to Europe to satisfy outstanding commitments. For instance, the ship has sailed for resupply from the Far East to make 2025 delivery dates. It would take +30 days for a tanker going at an average speed of 14 knots to travel from China's Lianyungang port (one SAF export location) to Rotterdam, Netherlands. If there are outstanding mandate requirements for this year, they would have to be met very promptly by shipments ex-Malacca Straits or USGC. There’s more wriggle room for intra-Europe sourcing.

Supply looks sufficient as 2026 volumes begin to take shape

Non-compliance with mandates would land obligated fuel suppliers with a fine to the tune of twice the cost of the difference between conventional jet fuel and SAF (HEFA-SPK), as well as being required to make up the shortfall in deliveries next year.

Looking ahead, shipping data we saw today showed one 10kt SAF cargo due to load ex-China in the first decade of December earmarked for ARA -- likely to be among the first SAF supply to count towards the 2026 mandate.