European SAF market faces oversupply through 2029, analyst warns
Surplus expected from 2026 despite 2% EU sub-mandate
Neste Rotterdam plants meet EU mandate by 2027
Renewable diesel margins outperform SAF in 2025
European sustainable aviation fuel producers face margin pressure through the end of the decade as new capacity floods the market faster than mandates can absorb supply, an official at Barclays said April 15.
Europe will be oversupplied with SAF from 2026 through 2029, with Neste's facilities alone capable of meeting the entire EU mandatory demand by 2027, Naisheng Cui, director of equity research at Barclays, said at the Sustainable Aviation Fuels Summit in Brussels.
SAF is currently priced at a discount to renewable diesel, which is produced from the same feedstock. Platts, part of S&P Global Energy, assessed SAF on an FOB basis at Flushing-Amsterdam-Rotterdam-Antwerp-Ghent at $2,645.25/metric ton April 14, a $244.31/mt discount to renewable diesel from the EU's approved Annex IX-B feedstocks, also on an FOB basis at Amsterdam-Rotterdam-Antwerp. This reverses a trend that appeared in March.
"It's a very niche market, and everyone is doing a lot of supply, [this can] kill the margin for everyone," Cui said. The EU's 2% SAF mandate translates to just 1.1 million mt of demand against European jet fuel consumption of 55 million mt/year, insufficient to absorb incoming capacity, Cui said. Chinese and Malaysian SAF facilities totaling 750,000 mt/year came online in recent months, with Neste's combined Rotterdam capacity reaching 1.2 million mt by 2027, he added.
Neste’s total renewable product capacity in Rotterdam will be 2.7 million mt/year, of which SAF production capability will be 1.2 million mt/year. The company’s target is to start up the new production unit in 2027, according to Neste’s website.
In 2026, Europe will consume 1.55 million mt/year of SAF, meeting 32%, or about one third of that demand, with its own production, according to data from S&P Global Horizons. In 2027, this rises to 1.8 million mt/year and a share of 38%.
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