Biofuels Market Analysis
Spend growth of this market has the potential to touch a value of over USD 56 billion with spend momentum accelerate at a CAGR of over 5% between 2019-2024. The global concern over the environmental footprints left by fossil fuels is paving the way for the prominence of the biofuels market. The presence of regulatory frameworks that encourage usage of biofuels and initiatives undertaken by governments to support production and R&D are creating ample spend opportunities in the global biofuels market. The fact that biofuels offer better price stability for buyers than gasoline and diesel is contributing to the demand growth in the biofuels market across regions.
Top Spending Regions in the Biofuels Market
In terms of spend growth, North America is claiming the largest share with the biofuels market in APAC exhibiting the promise of emerging as the fastest-growing market through 2024.
North America
The existence of favorable government regulations that motivate the use of bioenergy across all industries is propelling spend growth in the biofuels market in this region. In countries like the US and Canada, government issued mandates on the usage of biofuels as an additive to gasoline and diesel mixtures. This is increasing the demand for biofuels, such as ethanol and biodiesel, in North America. Currently, this region is holding the position of the largest consumer as well as a producer in the global biofuels market.
Europe
In a bid to reduce dependence on oil and energy imports, governments are taking initiatives to boost the domestic production of biofuels. In India, ethanol is the most commonly produced owing to its ease of manufacturing from sugarcane waste that is abundantly available in the country. The shortage of supply of gasoline and diesel, need for energy independence, and the focus on reducing GHG emissions are increasing promoting spend growth in the biofuels market in APAC.
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What are the Key Price Trends in this Market?
- Forecasts of fluctuations in the prices of raw materials such as sugar, cornstarch, vegetable oil, and animal fat will impact the overall price structure in the biofuels market. For instance, the demand for biofuels made from palm and rapeseed oil and sugarcane has increased the global price of these food products.
- The manufacturing costs of biofuels play key roles in the assessment of the commercial viability of biofuels. These costs tend to differ based on the types of feedstocks used in the production of biofuels. For instance, the production of corn-based ethanol accounts for lesser feedstock costs than the production of biodiesel.
- The plant setup cost for producing biofuels is high and varies on the basis of the type of raw materials utilized. For instance, the capital investment done in a sugarcane-based biofuel plant is higher than a sorghum-based biofuel plant. This renders a sugarcane-based ethanol plant 25% costlier than a sorghum plant of the same size.
Download the free sample of this report to know what the key biofuels procurement best practices that you must adopt to address price dynamism in this market.
Insights into Biofuels Supply Market
- Biofuels suppliers are incurring a substantial hike in their R&D expenses with the top suppliers expected to utilize almost 4% of their overall spend on R&D. This increase in their R
&D expense will be attributed to their growing focus to yield more versions of biofuels with higher efficiency thereby having less dependency on feedstock, such as vegetable oils and animal fats.
- The global biofuels supplier market is highly fragmented with multiple regional and global players. Global suppliers operate on higher profit margins than regional suppliers, owing to economies of scale and reduced plant downtimes for the periodic maintenance of equipment. This will help global suppliers boost productivity and improve profit margins.
- In the biofuels market, it is advised that buyers enter into long term contracts with suppliers. Thereby adopting SRM will help buyers understand the suppliers' SCM process and assess suppliers' contribution to procurement. This will help buyers in determining various tactics to maximize suppliers' performance and in developing strategic contract management initiatives.
Insights into Some of the Leading Biofuels Suppliers
The supply market dynamics hint at a substantial hike in suppliers' OPEX which will drive buyer's procurement spend. Keeping such dynamics in mind, strategic selection of suppliers and maintaining an effective supplier relationship management are observed to facilitate buyers with optimized procurement expenditure and better category management in the biofuels market. This biofuels market procurement intelligence report has enlisted the top suppliers and their cost structures, best selection criteria, and negotiation strategies for the top biofuels suppliers. The top biofuels suppliers highlighted in this report include:
- Cargill Inc.
- Archer Daniels Midland Co.
- BASF SE
- Royal Dutch Shell Plc
- INEOS Group Holdings SA
- Valero Energy Corp.
Criteria to select suppliers in this dynamic biofuels market is subject to change based on the day-to-day market outlook. Get a free demo of our procurement platform to gain immediate access into real-time insights to the changing suppliers selection criteria.
