Argus is the market leader for biofuel and biofuel-feedstock price assessments and market analysis.

What is UCO?
UCO refers to oil and fats that have been used for cooking and frying. These include soybean, corn, canola, palm, grapeseed and sunflower oil, as well as animal fats such as lard. The food processing industry, restaurants, fast food operations and households are all supply sources of UCO.

Why is Asian UCO important?
UCO is considered an advanced biofuel and is considered part of annex 9 of the revised Renewable Energy Directive, which aims to decarbonise transport in the EU. UCO-derived biodiesel can reduce greenhouse gases by more than 90pc compared with fossil fuel gasoil.

Asia is a supplier of UCO and UCO-based biofuels to Europe and the US.

China exported 848,000t of UCO and 806,000t of UCO methyl ester (Ucome) biodiesel during January-November 2020. Malaysia exported 408,000t and Indonesia 195,000t of UCO during January-October. Japan, South Korea and Vietnam are also growing regional markets.

How is UCO converted to biofuels?
UCO is a feedstock for biodiesel, renewable diesel and sustainable aviation fuel. It can be converted into biodiesel through transesterification to produce used Ucome or be hydrotreated to form hydrotreated vegetable oil (HVO) or renewable diesel.

HVO is more costly to produce but offers much better specifications, and so unlike biodiesel there is no limit on how much it can be blended with conventional fossil-based diesel. Renewable diesel is seen as a complete substitute for conventional diesel, or a “drop-in” fuel.

Which Asian UCO markets does Argus assess?
Argus started assessing the fob China UCO flexitank market in February 2018 and bulk in September the same year, followed by fob Malaysia/Indonesia flexitanks in August 2020. Please contact us should you need a price history for UCO.

A key difference is that UCO out of southeast Asia is predominantly palm oil-based and so carries a lower iodine value, which in turn raises the cold filter plugging point of the resulting Ucome biodiesel.

Argus also assesses a cif ARA flexitank UCO market as Europe is the biggest market for the biodiesel feedstock, importing 951,000t during January-October 2020, of which 288,000t came from China, 366,000t from Malaysia and 198,000t from Indonesia.

How does Argus assess Asian UCO?
Argus Asian UCO methodology is market based and clear, relying on deals, bids, offers and any other relevant information when assessing the fob China and fob Malaysia/Indonesia markets. Flexitank quotes are for 500-1000t and bulk for 3,000-5,000t cargoes loading 30-45 days forward from the date of assessment.

For the full methodology of Argus Biofuels report, please click here

What’s happening with Asian UCO prices?
Flexitank prices are at record highs of $907.50/t and $845/t respectively for fob southeast China and fob Malaysia/Indonesia respectively, as supply constraints drive the market. China is heading into lunar new year holidays in mid-February, while transport restrictions in China’s Hebei province have reduced UCO collections. Malaysia imposed a movement control order 13 January, which is expected to significantly affect waste collection in the country. Container freight costs tripled towards the end of last year also amid severe shortages that have compounded the price increases.

1. China-Europe freight costs threaten UCO trade into 2021
   
   
2. Biodiesel feedstocks face Malaysian lockdown squeeze
   
   
3. UCO, Ucome stuck in Hebei as China tightens lockdown