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 strengthened last week as both diesel prices and feedstocks posted material losses.
SBO losses were limited to just over 1pc week-over-week, eroding SBO-based renewable diesel margins for a second consecutive week and leaving biodiesel margins at the weakest level in nearly a month.
On the credit side, RIN markets remained soft in response to a court ruling halting compliance obligations for two refineries with small refinery exemptions (SREs) petitions. The chance for a pivot on the EPA’s approach on SRE petitions could prove materially bearish for RIN prices. Lower RIN prices weaken RD and BD margins all else equal.
A recent attempt by a handful of Republican senators to overturn all existing 69 SREs through a Congressional Review Act was quickly quashed by the Government Accountability Office last week.
Used cooking oil (UCO) remained the highest returning feedstock last week as turnaround activity in the US Gulf coast and elsewhere weighed on the favored low carbon intensity (CI) feedstock.
A structurally oversupplied California Low Carbon Fuel Standard (LCFS) market continued to weigh on credits with a negligible impact on margins.
Talk of wider turnaround activity in the US Gulf coast circulated last week and largely materialized in sharply lower UCO prices.
