The government of Argentina has set an 8% export duty on biodiesel, which is expected to have a large effect on the European fuel market.

The export tariff, set to come into effect on 1 January 2018, could now support fatty acid methyl ester (FAME) 0 biodiesel, either by raising import costs or reducing the overall volume of imports, Platts wrote on 14 December.

“With the new tax coming in, it will make the landing price much higher and probably pull up FAME,” an unnamed source told the news agency.

The source added that rising FAME prices could narrow rapeseed methyl ester’s (RME) premium over FAME due to it not being affected to the same degree by the new tax.

According to Platts, European soya methyl ester (SME) imports had kept biodiesel prices – particularly FAME 0 premiums – suppressed in Europe due to the large amount of SME available to be blended.

The Argentine government said the imposition of the tax was justified to harmonise the exporting rights of biodiesel and soyabean oil, the main raw material for Argentine SME biodiesel.

Included in the tax law was a clause stating that the Ministry of Energy and Mining would set domestic biodiesel prices in Argentina.

The move was seen as a response to the USA imposing antidumping duties on Argentina in November after the US biodiesel industry claimed Argentine biodiesel export were being subsidised.