Polish biodiesel production jumped almost 11% on the year to 184,684 mt in the third quarter of 2013, the Energy Regulatory Office (URE) said Thursday. A local market source attributed the rise to strong downstream diesel demand bolstering rates.

The Q3 figure also represented a 20% increase on production in the previous quarter, compared with an average 1.3% increase from Q2 to Q3 in the previous three years.

"We saw bigger supply in Q3 due to the fact that Polish refineries were looking to fulfill the [biofuel] mandate, as ULSD sales jumped," the source said.

Biodiesel production across the European Union was also up in Q3. Lower imports, due to impending anti-dumping and anti-subsidy duties against Indonesia and Argentina, reduced resupply opportunities and bountiful feedstock rapeseed crops improved margins.

However, the higher production in Poland was due to more isolated factors, said the source, with government incentives to use local material providing a buffer against external markets in general.

"The increase had not much to do with import duties, more with local demand," the source said. "Poland is a protective market -- polish refineries buy local production, because they have a 15% incentive on the mandate. Imports are not very demanded."

If Polish refiners and blenders source at least 70% of biofuels from producers registered with the Agricultural Market Agency (ARR), they are able to reduce total mandated requirements by 15%.

ETHANOL PRODUCTION SEES SMALLER INCREASE

Polish fuel ethanol production in Q3 rose to 46,518 mt, up 1.9% from Q2 to the highest level since Q1 2010. Compared with the same quarter of last year, output was up 9.7%.

Higher production figures came on the heels of improved grains-to-ethanol crush margins, which soared to multi-year highs at the tail end of Q3 due the availability of cheaper corn crops from 2013 harvest.