# Biodiesel (FAME): Cycles

How oil price spikes switch plants on and off

Source page: https://www.materialinsights.org/energy/biodiesel/cycles/

What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

FAME margins are set by the gap between vegetable oil and diesel prices plus credit values. When vegetable oil is cheap against gasoil, plants run; when oils spike (2008, 2022) or credits fall, they idle. Policy is the main driver: blending mandates, the Indonesian levy-funded subsidy, US RINs and tax credits, and EU anti-dumping duties move trade and utilisation more than demand does. Chronic overcapacity keeps average utilisation low.
 The spread to watch **BOHO spread (US) and HIP minus gasoil (Indonesia)**

US: soybean oil price per gallon of biodiesel minus heating oil (ULSD) futures, before RIN, LCFS and tax credit value; plants need credits to cover a usually positive spread. Indonesia: the government sets a monthly biodiesel market index price (HIP) from CPO plus a conversion allowance, and the levy fund pays the gap to diesel (indicative).

#### Booms and busts

1. 2006-2008

EU biodiesel mandates, crude above $100/bbl and low oilseed stocks drove the first biofuel boom in vegetable oils, then the crisis collapsed margins (rapeseed tile).

not retrieved

2. 2013-2018

The EU imposed anti-dumping duties on Argentine and Indonesian biodiesel, which redirected exports and pushed Indonesia to raise domestic blending (indicative).

not retrieved

3. 2022

Covid labour shortages, Indonesia's B30, the war in Ukraine and Indonesia's export ban (28 Apr-23 May 2022) caused the sharpest vegetable oil spike on record (palm_oil tile).

not retrieved in sources used

4. 2023-2025

Cheap Chinese FAME flooded the EU (1.07 Mt in 2023); the EU imposed provisional duties in Aug 2024 and definitive duties in Feb 2025, cutting imports to 0.16 Mt (EBB). US FAME plants closed as HVO took share.

US FAME utilisation 58% in 2025 (farmdoc daily)

#### What drives the cycle

- **Blending mandates.** Indonesia B40 to B50, Brazil's step-ups and EU RED targets set most demand.
- **Vegetable oil prices.** Oil is 80-85% of cost; palm export levies and weather move it.
- **Credits and tax policy.** RIN prices, 45Z eligibility (imports excluded) and LCFS credits decide US margins.
- **Trade defence.** EU duties on Chinese, Argentine and Indonesian biodiesel (8-18% on Indonesia extended five years in 2026, Argus) redirect flows.

#### Metrics to track

| Metric | Why it matters | Where to track it |
|---|---|---|
| **EIA Monthly Biofuels Capacity and Feedstocks Update** | US output, feedstocks and utilisation | EIA |
| **D4 RIN price** | value of biomass-based diesel compliance | EPA EMTS; OPIS, Argus |
| **Indonesian HIP biodiesel price and levy** | sets Indonesia's subsidy cost | Indonesian Ministry of Energy (ESDM) |
| **EBB quarterly production** | EU output by country | European Biodiesel Board |

## Other sections

- [Summary](https://www.materialinsights.org/energy/biodiesel/index.md)
- [Energy overview](https://www.materialinsights.org/energy/biodiesel/energy/index.md)
- [Correlation](https://www.materialinsights.org/energy/biodiesel/correlation/index.md)
- [Efficiency](https://www.materialinsights.org/energy/biodiesel/efficiency/index.md)
- [Techniques](https://www.materialinsights.org/energy/biodiesel/techniques/index.md)
- [Resources and labour](https://www.materialinsights.org/energy/biodiesel/resources/index.md)
- [Impact on the biosphere](https://www.materialinsights.org/energy/biodiesel/biosphere/index.md)
- [Overview](https://www.materialinsights.org/energy/biodiesel/overview/index.md)
- [Production route](https://www.materialinsights.org/energy/biodiesel/routes/index.md)
- [Production](https://www.materialinsights.org/energy/biodiesel/production/index.md)
- [Feedstocks](https://www.materialinsights.org/energy/biodiesel/feedstocks/index.md)
- [Trading](https://www.materialinsights.org/energy/biodiesel/trading/index.md)
- [Movement](https://www.materialinsights.org/energy/biodiesel/movement/index.md)
- [Regulation](https://www.materialinsights.org/energy/biodiesel/regulation/index.md)
- [Characteristics](https://www.materialinsights.org/energy/biodiesel/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/energy/biodiesel/emissions/index.md)
- [Relationships](https://www.materialinsights.org/energy/biodiesel/links/index.md)