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 fell as the expiry of the April Nymex ULSD contract outpaced losses in feedstocks. The market shifted to the lower-price May Nymex ULSD contract at midweek.
Biodiesel margins trended marginally lower following last week’s rally as the soybean oil to heating oil (BOHO) spread widened marginally on soybean oil (SBO) gains.
Bleached Fancy Tallow (BFT) overtook Used Cooking Oil (UCO) as the highest returning feedstock last week, while stronger spot soybean oil (SBO) prices saw SBO give back the prior week’s gains in margins.
D4 RINs were little changed across vintages, with a modest gain in 2023 D4s negligibly underpinning margins.
The California Low Carbon Fuel Standard (LCFS) market recovered some of the previous week’s losses as prompt credits firmed.
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.
Tidewater Renewables Ltd. expects to begin operations at its 45mn gallons/yr Prince George Refinery in British Columbia, Canada by Q2. The plant will ramp up to 80% nameplate capacity by the second half of 2023.
FutureFuel Corp. is considering halting biodiesel production citing rising feedstock prices, uncertainty on the permanency of certain federal tax credits and heavy competition from the renewable diesel industry. The company owns a multifeed, 59mn gallons/yr biodiesel plant in Batesville, Arkansas.
