First Index Trade in Used Cooking Oil
January 15, 2020
SCB Group, the world leading, low carbon commodity brokerage, is pleased to announce that it has brokered the first ever trades of used cooking oil (“UCO”) on an index basis in August 2019.
The ground-breaking trades, which are based on the daily reported pricing on PRIMA T1 NON EU UCO CIF ARA in USD per metric tonne, took place in August and October 2019, due for delivery in 2020.
The PRIMA Index calculates daily trade flows of UCO, providing real-time pricing for the product. The trades will enable both buyers and sellers to pay market price for the UCO at the time of loading.
UCO, which has been internationally traded as a feedstock for biodiesel for the last eight years, has previously been traded on a flat price basis. To date, flat pricing has limited the maturity of the UCO market as suppliers have been unable to offer the product more than two months in advance due to uncertainty around UCO price and shipping costs at the time of loading.
The new index-linked pricing from SCB sets out to change the way UCO is traded, increasing liquidity, allowing buyers to lock in production margins and sellers to lock in profit margins.
Sarah Xavier of SCB commented:
“For too long the UCO market has been hampered as producers’ and suppliers’ only option has been to agree trades on a flat price basis. This clearly has historically benefitted one party at the expense of the other, depending on movement in UCO price between [agreement] and delivery.
“This alternative and highly innovative PRIMA Index UCO product will increase trade liquidity and will allow producers to trade their biodiesel, as well as benefit majors by allowing them to lock in blend stocks to meet government mandates.”
Matthew Stone, Managing Director at PRIMA, added:
“Recycling of wastes is surging in the fight to decarbonise the transport sector. UCO has become the main feedstock used by biodiesel and HVO producers to produce the low carbon intensity fuel supply growth policy-makers require post-2020. PRIMA’s Indexes track global price development and provide the foundations for this key decarbonisation industry to develop.”
For further information please contact:
Pauline Tainton, Marketing Officer, SCB + 41 22 365 5310
Camarco, Financial PR + 44 20 3757 4995
Billy Clegg, Jennifer Renwick, Monique Perks
Notes to Editors:
SCB Group is a world-leading commodity brokerage with a mission to promote the adoption of a low carbon future. Its method is to assist buyers and sellers close trades in environmental products. In this context, SCB has over the last 13 years arranged transactions that have abated 300 million MT of CO2 through activities in Europe, Asia, Africa, and the Americas.
SCB operates in high growth markets and for over ten years has been the world’s largest biofuel broker, holding leading positions in physical and derivative markets including Biodiesel; Ethanol; Waste; Methanol; Carbon; Agriculture; Battery materials; LNG and Energy Derivatives. SCB is the market leader in its core markets.
SCB has a stable, diverse, aligned management team and strong Board, has a positive, progressive business culture and is profitable, with positive cash flow. SCB is a high growth business delivering 15% CAGR over the last ten years with a clear future growth strategy. By 2024 SCB aims to have doubled the size of its business - revenue, staff numbers and CO2 impact.