Our analysis of the latest Eurostat data available, covering the Jan-Aug period, highlighted an acceleration of the monthly pace. In July and August, the EU imported about 120 KT per month. Most of the growth is currently fuelled by Asian origins.
After a very strong 1H-18, imports of used cooking oil under the 15180095/99 codes sustained their growth into July (119 KT, + 37%) and August (126 KT, + 31%). More than 60% of the total supply originated from Asia. China accounted for 38% of the total during the period, with a big 93 KT delivered over the two months. Because some UCO exports to the EU are still reportedly performed under other codes, it is difficult to assess the total quantity of Chinese UCO hitting the Union. One thing is sure: it’s growing fast. During Jan-Aug, at least 235 KT were reported by Eurostat under the two codes. Market sources in Asia very familiar with the trade said the flow would be of at least 500 KT in 2018. We believe that estimation does not include UCOME direct exports. Some market players complained that it is currently difficult to find spot volumes Fob China. That it is also because the trade is more organised with forward quantities booked by a growing number of competitors.
The US remained the second supplier to the EU with an average of 20 KT per month delivered, which is about the same pace as during the past years. Although American UCO is more in demand by the Californian market, exporters still find a way to maintain the level of supply to the EU. That might not last in the coming years. Behind the US, the significant origins are Malaysia (20 KT delivered in Jan-Aug), Indonesia (14), Saudi Arabia (11), Japan (10), Russia (9) and Taiwan (5). South America is clearly the most under-tapped origin compared to its potential. When the prices will increase in the coming years, we believe it will grow on the map as Asia is growing now.