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 mixed last week, from January 30 through February 3, as heavy losses in diesel prices outpaced declines in most renewable feedstocks.
Diesel and credit weakness required feedstock prices to fall to preserve margins, yet stubbornly high soybean oil (SBO) prices saw heavy losses in SBO margins for both renewable diesel and biodiesel producers.
A downward correction in RIN markets in response to a court ruling halting compliance obligations for two refineries with small refinery exemptions (SREs) petitions rattled markets. The chance for a pivot on the EPA’s approach to SRE petitions could prove materially bearish for RIN prices.
Used cooking oil (UCO) proved the highest returning feedstock last week as prices responded quickly to the deteriorating margin environment.
The second consecutive record build in California Low Carbon Fuel Standard (LCFS) credits saw prompt credit prices shed value, further eroding margins.
A Gulf Coast producer is scheduled to undergo maintenance next month, yet the extent and duration of work to be conducted are unknown.
