Singapore (Platts)--1Sep2010/554 am EDT/954 GMT

Singapore, Asia's key regional hub for oil trading, is no longer used as a transhipment point for biodiesel because of the current anti-circumvention probe by the European Commission, said an industry source Wednesday. "Biodiesel trading in Singapore has completely been chased out by the EC investigations," the source, who regularly exports biodiesel out of the region, said. Singapore was used to consolidate shipments of palm methyl ester, or palm oil-based biodiesel, from Malaysia and Indonesia, but traders are now likely to send shipments directly from producing origins, he said. The Singapore's Ministry of Trade and Industry circulated a note last month to Singapore companies exporting biodiesel to the European Union to assist in the investigation. "MTI has since notified and been in close touch with the affected companies," a MTI spokesman said Wednesday, without giving further details. In the note, MTI said if a company has exported the said product to the EU between April 1, 2009 and June 30, 2010, there may be an impact if the investigation determines that the company's exports were in fact transhipped products from the US to the EU via Singapore. "Customs in EU has already begun requiring all shipments of palm methyl ester from Singapore to post a bond equivalent to the countervailing duty, so this effectively will stop all Singapore shipments of biodiesel, will also now have no more transhipment of biodiesel because of this EU rule," said the source. The European Commission has launched an investigation into imports of US-produced biodiesel to Europe as it seeks to determine if antidumping measures that were imposed on the US in March 2009 are being circumvented. The investigation follows a request by the European Biodiesel Board, which claims that the US biodiesel is reaching Europe without paying antidumping duty, either through triangular trading through other countries, mainly Canada and Singapore, or through the import of B19 - a mixture of 19% biodiesel and 81% gasoil - which is not covered by the EU duties. TRADERS WILL NOT BE ABLE TO STORE BIODIESEL IN SINGAPORE Palm methyl ester was being stored in Singapore during the northern winter period, but now traders will not be able to use Singapore storage, the source noted, who has already emptied out his storage tanks in Singapore. "So there is very little incentive to buy PME during the winter in the region, this is a huge impact," he said. Demand for PME, which is normally sold into Europe as a blendstock, typically declines towards the end of third quarter, when the markets in Europe make the switch to winter grade biodiesel. So PME is kept in storage during that period. PME holds a typical high cold filter plugging point level of around plus 12, more suitable for summer grade biodiesel, while the winter grade holds a CFPP of minus 10. --Weilyn Loo, weilyn_loo@platts.com Similar stories appear in Oilgram News. See more information at http://www.platts.com/Products.aspx?xmlFile=oilgramnews.xml