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 were marginally higher week-over-week as feedstock losses were met by a largely stable Nymex ULSD contract, while lower credit markets provided headwinds.
Biodiesel margins snapped higher as the soybean oil to heating oil (BOHO) spread narrowed to the lowest level since late January.
Used Cooking Oil (UCO) remained the highest returning feedstock last week, while downward corrections in the CBOT soybean oil (SBO) market saw SBO become more competitive in the feed arena.
D4 RINs were marginally lower across vintages weighing modestly on the margin environment.
The California Low Carbon Fuel Standard (LCFS) market lost steam after firming for two consecutive weeks.
The Washington State Senate passed a Sustainable Aviation Fuel (SAF) tax credit, following actions from the state of Illinois which issued its own SAF credit with additional tax advantages for the fuel. Washington aims to establish a $1/gallon credit with a $2/gallon cap as additional value can be earned for fuels with lower carbon emissions. The Illinois SAF credit is set at $1.50/gallon and will run from June 1, 2023, through June 1, 2033, making the state the highest returning market for SAF.
Vertex expects to complete its 10,000 Bbl/d Mobile, Alabama renewable diesel facility by the end of this month, with production set for the second quarter. Vertex aims to boost capacity to 14,000 b/d in late 2023, an expansion originally planned for 2024.
