RIN prices traded higher over the course of July as the market corrected for persistent selling in the lead-up to the June 21 release of the EPA ‘Set Rule’ and declining renewable diesel and biodiesel margins supported D4 credits. The ruling greatly underestimated the impact of surging renewable diesel growth, with the decision driven primarily by concerns over feedstock supply.
D4 RINs led advanced D5 and Renewable D6 RINs lower in the wake of the release before the weakest soybean oil-to-heating oil (BOHO) spread in 14 months supported D4 credits. A deteriorating renewable diesel margin environment also underpinned D4 markets despite concerns of mounting oversupply from the stellar pace of renewable diesel growth.
The D3 market rallied sharply reaching the highest levels in over a year as the final ‘Set Rule’ established robust mandates for the cellulosic category based on a 25% per year growth target for the Renewable Natural Gas (RNG) industry. The EPA also made clear it would not issue a Cellulosic Waiver Credit (CWC). The controversial eRIN program was scrapped from the final ruling but left open for an additional comment period.