Persistent volatility drives consistent uncertainty for renewable diesel and biodiesel producers. With increased regulatory action and production growth on the horizon, alongside mounting geopolitical tensions, stakeholders need a weekly insight into their operational costs and returns.
What happened?
US renewable diesel (RD) margins softened as April Nymex ULSD weakened in choppy trade, while a downturn in feedstocks limited losses.
Biodiesel margins made sizeable gains for a second consecutive week as the soybean oil to heating oil (BOHO) spread recovered on diesel strength and as the March CBOT Soybean oil (SBO) contract expired and the market transitioned to the lower-priced May contract.
Used Cooking Oil (UCO) was supplanted as the highest returning feedstock last week by Bleached Fancy Tallow (BFT), as UCO losses were much less pronounced relative to other feeds—an indication turnaround activity may be wrapping up.
D4 RINs were largely flat on the week, posting negligible losses. The week prior saw heavy losses in 2023 D4 RINs present material headwinds to the margin environment.
The California Low Carbon Fuel Standard (LCFS) market recovered following a brief downward correction.
Parkland Corp. announced its decision to halt its renewable diesel project in British Columbia, Canada. The company had been coprocessing at its Burnaby Refinery with plans to build a 273,000 gallons/yr RD facility, set to come online in 2026. The company cited rising feedstock costs and advantages to US producers afforded by new credits carved out in the Inflation Reduction Act (IRA). The move could be a harbinger of slowing momentum for the RD industry which has increasingly worried about rising feedstock costs, while the numerous advantages of the US market is likely to open export markets soon.
ExxonMobil has threatened to pull out of its offtake agreements with Global Clean Energy’s if the former Big West facility is unable to produce RD by the end of June. The major complained of delays and concerns over project costs. The 210mn gallon/yr facility is running a year behind schedule.
