OREANDA-NEWS. August 23, 2017. Importers of Argentinean and Indonesian biodiesel to the US could face penalties for gallons brought in since May under a preliminary finding by the Department of Commerce.

The finding will raise prices for a key blendstock under federal biofuel blending mandates, as well as compliance costs for refiners and importers under the Renewable Fuel Standard. Domestic biodiesel producers said the preliminary finding would ease pressure on a US industry swamped by cheap imports from those countries in previous years.

"The US values its relationships with Argentina and Indonesia, but even friendly nations must play by the rules," US commerce secretary Wilbur Ross said. "The subsidization of goods by foreign governments is something that the Trump administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination."

Subsidies by each country for biodiesel exports to the US merit countervailing duties on the biofuel blendstock and will require importers of the fuel to pay cash deposits in order to bring in more, according to the preliminary finding.

"The Commerce Department has recognized what this industry has known all along — that foreign biodiesel producers have benefited from massive subsidies that have severely injured US biodiesel producers," National Biodiesel Board chief operating officer Doug Whitehead said in a statement.

Trade groups for companies blending the fuel into the US transportation supply quickly denounced the ruling as punitive, and a short-sighted effort by domestic producers.

"Good luck with having a market in the future when you arbitrarily try to take a two-by-four and hit your customer in the face," Advanced Biofuels Association president Michael McAdams said. "We would rather have a world market to serve, rather than the state of Iowa."

Importers of Argentinean biodiesel will have to pay deposits of 50.29pc of the expected duties for exports by LDC Argentina and 64.17pc for Argentina exporter Vicentin for cargoes received in the 90 days preceding publication of the finding in the Federal Register, which the department expected shortly. Exports from all other Argentina companies would require a 57.01pc deposit.

Indonesian exports from Wilmar International would require a 41.06oc deposit, from PT Musim Mas a 68.28pc deposit, and from all other companies exporting Indonesian biodiesel a 44.92pc deposit.

Argentina's biodiesel group Carbio said the finding was a surprise, and that the biodiesel was not subsidized. The duties will "result in an immediate paralysis of sales to the United States, with a clear prejudice to the entire soybean value chain in Argentina," Carbio president Luis Zubizarreta said.

Refiners and fuel importers rely on biodiesel blending to meet obligations under the Renewable Fuel Standard. Such companies must each year ensure minimum volumes of renewable fuels including biodiesel enter the US fuel supply, proving compliance by collecting renewable identification numbers (RINs) representing blended fuel.

Because requirements far outstrip the volume of ethanol blended into gasoline supplies, companies rely on excess biodiesel blending to make up for otherwise large gaps in compliance.

Countervailing duties would raise the price of biodiesel imported to meet those mandates, groups warned. Imports made up 30pc of the 2.1bn biodiesel RINs generated so far this year, down from 43pc of biodiesel RINs imported for all of 2016.