La biodiesel industry has grown significantly in recent years. At first it was export-oriented, taking advantage of Argentina's natural advantages as a soybean producer. After the implementation of the internal cut, sales to the local market also increased.
Internal regulation prioritizes SME companies to supply the domestic market. Otherwise, larger companies concentrate on the export market and currently have very little participation in local sales. They are strongly concentrated in the province of Santa Fe.
On the other hand, companies with a production of up to 50.000 tons per year share the local market and practically do not ship abroad. They enjoy a differential price to sell to the domestic market.
Between 2012 and 2013, the biodiesel industry was subject to two sanctioning measures by the European Union in general, and Spain in particular. At the end of April 2012, the Spanish government decided to begin suspending the purchase of Argentine biodiesel, replacing the old suppliers with European manufacturers, until reaching the definitive closure of the market in November 2013.
But without a doubt the biggest blow to the biodiesel industry was the implementation of a tariff antidumping directly from the EU.
Fortunately for the industry, the national government's response was swift, and biodiesel production benefited from an increase in internal cut, tax exemptions and a reduction in export duties. Thus, towards the end of 2014 the biodiesel industry seemed completely recovered, far exceeding pre-crisis levels.
However, the recovery was short-lived. Towards the end of 2014, the collapse of fuel prices discouraged the use of biodiesel to mix with diesel. The result was a collapse in our country's exports, which have remained at minimum levels ever since.
During the first half of 2015, external sales of biodiesel barely reached 236.550 tons, less than half that in the same period of 2014. Not only that, but in turn when local companies managed to place their products abroad They did so at a price that on average was approximately 25% lower than what they received until the previous year.
Unfortunately for the biodiesel industry, everything seems to indicate that the world is heading towards a scenario of cheap fuels, at least in the next two years.
The general consensus is that the WTO will rule in favor of Argentina regarding the WTO dumping accusations. However, it would only come into effect towards the end of next year. In turn, exporting to the EU will present new challenges
Based on the scenario presented here, the biodiesel industry will face a sharp decline in 2015, and it is estimated that it will remain stagnant at low levels in 2016.
El institutional framework, currently harms the production of the province of Santa Fe and favors the installation of low-scale and lower efficiency factories.
Although greater inclusion of larger-scale companies in the domestic market could cause inconveniences in the business of SMEs, it would be at least desirable to take measures to prevent a crisis in larger factories that is combined with greater investments in plants of up to 50 thousand tons.