London (Platts)--8May2009

High replacement costs and faltering demand are two of the factors
inhibiting biodiesel trading activity in Northwest Europe, sources said
Friday.

"People are waiting for feedstock prices to go down, because replacement
costs are [high]," said one source.

Throughout the week, a $30-40/mt gulf has opened between bid and offer
levels heard for premiums of FAME 0 and RME in Northwest Europe.

"The market is pushing higher...and this is partly due to increasing
replacement costs," said a second source, who agreed buyside interest was
limited.

For example, sources suggested that replacement costs for palm methyl
ester could easily hit $1,000/mt on a FOB Amsterdam-Rotterdam-Antwerp basis.
By comparison, one clip of PME was done Tuesday at $350/mt, on a CIF ARA
basis.

An FOB price excludes freight and insurance costs, while a CIF price
includes them.

"There's also not a lot of demand around, I get the impression that
people are just showing levels," said another trader.