OREANDA-NEWS. August 16, 2017. A surge in imports that hampered the US biodiesel industry for most of 2017 should ease as the US administration appears close to placing import tariffs on Argentinian and Indonesian imports.

The National Biodiesel Board Fair Trade Coalition filed an antidumping and countervailing duty petition on 23 March, alleging those countries' producers receive unfair government subsidies. That has helped those producers dump their product in the US at below fair-market prices, helping them gain about 18pc of market share.

Imports of Argentinian and Indonesian biodiesel surged nearly five-fold from about 327,000t in 2014 to 1.84mn t in 2016, according to the US Department of Agriculture (USDA). Imports from Argentina during the first half of 2017 have risen by about 61.7pc year-over-year to about 572,000t. About 230,000t, or nearly 40pc, of the 2017 first-half total came in June alone.

The US International Trade Commission (ITC) made a unanimous preliminary determination on 5 May that imports from Argentina and Indonesia injured US biodiesel producers. The US Department of Commerce has twice delayed its preliminary determinations decision, with the latest deadline now being 19 October. Final determinations are due within 75 days of the preliminary determination.

The fact that Argentina producers have sent that much product during the first half of 2017, and in June in particular, is surprising given that the $1/USG biodiesel blenders tax credit (BTC) has expired. As a result of the surge in Argentinian imports during June, the National Biodiesel Board (NBB) filed a petition on 10 July with the Commerce Department claiming "critical circumstances" exist to impose tariffs, which would allow for retroactive duties.

Market participants believe that it is highly likely that import tariffs will be placed on Argentinian and Indonesian biodiesel. The imposition of tariffs should significantly slow imports from those countries while driving up domestic demand to satisfy biofuel mandates.

US biodiesel plant capacity utilization was 59.3pc in 2015 and 68.9pc in 2016, according to the US Energy Information Administration (EIA). Capacity utilization for the first five months of 2017 has fallen to 58.7pc, down by more than 3pc from the same period in 2016. The relatively low level of capacity utilization suggests that US producers would have the ability to increase output. But it generally takes up to two months to source enough feedstock and bring off-line plants on line, so any significant rise in production is unlikely for the remainder of 2017.

Another issue that has been plaguing the industry this year is the reinstatement of the BTC, which expired at the end of 2016.