Metals Movers (Argus series within Argus Media feed)
The Biofuels Report: Feedstock vs Fuel - Why UCO Isn’t Keeping Pace?
Why It Matters
Understanding UCO’s price dynamics is crucial for investors, producers, and policymakers navigating the renewable fuels transition, as feedstock costs directly affect the economics of biodiesel and SAF. The episode highlights how regulatory structures and market flexibility, rather than oil price spikes, are the dominant forces shaping the biofuels landscape today.
Key Takeaways
- •UCO prices stay low despite Middle East geopolitical tensions.
- •Blend wall and Yukomi anchoring limit UCO price growth.
- •Feedstock flexibility pushes producers toward acid oils and industrial waste.
- •US policy shifts reshape global UCO trade flows.
- •Long‑term SAF demand may tighten UCO market later.
Pulse Analysis
The episode opens by noting that used cooking oil (UCO) prices have barely moved despite Middle‑East tensions that have sent crude oil soaring. Arreski explains UCO behaves unlike traditional energy commodities because supply is fragmented across many small collectors and pricing is tied to the Yukomi (B7 biodiesel) reference curve. The EU’s B7 blend wall caps biodiesel demand, while the shift toward hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) pulls volume away from Yukomi. Consequently, regulatory mandates, not geopolitical risk, dominate short‑term UCO price formation for European refiners and downstream blenders.
Producers are blending UCO with acid oils, industrial waste, or pre‑treated streams to improve margins, but only plants equipped for high free‑fatty‑acid (FFA) levels—mainly in Spain and Germany—can execute such blends. The United States, after protectionist tariffs (45Z credit) reduced Asian UCO imports, is now re‑engaging with the global market, seeking both finished biodiesel and cheaper feedstocks like soybean oil in the North American market. These trade‑flow shifts create arbitrage opportunities but remain limited by certification and EPA approvals.
Looking forward, the blend wall and Yukomi caps keep near‑term UCO upside limited. Yet expanding SAF mandates, potential B10 legislation, and rising demand in markets such as India could tighten supply and lift prices. If regulators relax the B7 ceiling or introduce higher‑blend requirements, UCO may capture a larger share of renewable‑fuel mandates, driving price growth. Until such policy changes occur over the next decade, geopolitical shocks will remain muted, confirming that regulation, not oil volatility, is the primary price driver for UCO.
Episode Description
In this episode, Anna Prokhorova (Senior reporter - waste feedstocks, Biofuels, Argus Media) is joined by Arezki Djelouadji (partner, Greenea) to explore the reasons behind the disconnect — from UCO’s structural pricing link to Ucome, to the role of blend walls, growing demand from HVO and SAF, and the rise of feedstock flexibility.
They also look at shifting global trade flows and what changing US policy means for European markets, and why short-term signals differ from the longer-term outlook.
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