Despite the latest EMTS data showing a much needed surge in D4 production, B17 RIN’s had their best weekly showing since the first week of May.  B17 RIN values climbed a robust 6 cents for the week, closing at 110.  Intraday, the B17 RIN traded up to 113 before momentum subsided and bids fell back to 109.  The B17’s closed at their highest level since December 21, 2016.  Ethanol RINs did not follow or lead in this rally.  E17’s finished the day down about a penny, but up nearly two cents for the week.  The B17/E17 spread is 34 cents wide, expanding by 4 cents this week on the strength of the bio RIN.

Rising soybean oil prices and stagnant heating oil values are making blend margins disappear.  The BOHO increased 6½ cents this week to $1.01 per gallon.  Like the B17 RIN, this is the BOHO’s highest reading since December 21, 2016. Soybean oil prices climbed 2.54% to 33.11 cents per pound, while heating oil values increased 4 tenths of a cent.

The LCFS credit continues to quietly rally.  Bids climbed to $80 with offers resting two dollars higher at $82.  For the week, the credit is up $10.  This provides a nice boost for UCO based biodiesel producers in and out of California that supply biodiesel to that market.  The average price per gallon for the UCO based credit moved from 71cents to 81 cents.

Weekly LCFS Credit Trading

The volume of LCFS credits that traded during the week ending June 11^th was up noticeably from the week prior.  Per California’s Air Resource board (CARB), 91,800 credits traded between June 5^th and the 11^th. Average weekly credit volume for 2017 increased from 91,769 credits to 91,771.  Market activity has been subdued, but is beginning to stir after several quiet weeks.  Current credit trading remains well below the 121,567-average covering the second half of 2016.

Weekly data shows that credit prices are beginning to push higher and the trading range is expanding.  Over the past week, credits traded between $69.00 to $98.00, with the average price being $76.29 per credit. There were 12 transfers recorded during the week, 10 more than the number recorded during the prior week and 1 less than the 2017 weekly average of 13 transfers per week. During the prior week, credits traded between $69.50 and $74.00, at an average price of $73.36.

The average credit trading price agrees with what outside brokers have been indicating the market to be. CARB’s weekly report excludes 9 transfer totaling 29,800 credits because they were reported at zero or near-zero dollar prices.  CARB only includes transfers that were completed in the given week.  Any transfers proposed and still pending confirmation are excluded.

May 2017 Biomass-based diesel production surges 26%

Biodiesel/Renewable diesel production shifted into a higher gear during May.  According to the latest EMTS data, 231.11 million biomass-based diesel gallons were produced.  This is the 6^th highest monthly production rate on record and up 26.35% from the revised monthly total of 182.92 million gallons in April.  May 2017 production is 12.23% more than what was produced during May of 2016.  Year to date, 862.98 million D4 gallons have been produced, which is 37.69 million more gallons than what was produced Jan to May of 2016. The current average production rate through May has the industry back on track to achieve the D4 mandate.

If the industry were to continue to produce/blend at the rate seen in May, there would be 2.48 billion gallons and 3.82 billion RINs consumed.  This would bring production close to the pace necessary to satisfy both the D4 and unspecified portion of the D5 mandate without having to dip heavily into the RIN bank.

44% of the D4 mandate (based on RINs) is satisfied. However, only 6% of the unspecified portion of the D5 mandate has been filled. 162.4 million gallons per month of D4 production would complete the D4 mandate.  Another 86 million gallons per month could be necessary to fulfill the unspecified portion of the D5 mandate. Combined production needed to satisfy both mandates is 248.42 million gallons per month.    Of course, that only holds true if the EPA’s estimated gasoline and diesel consumption figures prove to be on target.  The latest STEO estimates indicate that they are low, which means obligated parties are likely going to need to purchase more RINs than indicated by the published RVO’s, or withdraw RINs from the RIN bank in order to comply.

The D4 category is a combination of both biodiesel and renewable diesel production. The increase in May production was fairly uniform between the two D4 categories.  Renewable diesel output ramped 27.4.2% higher, increasing from 34.1 million gallons’ l to 43.5 million. Biodiesel production moved 26% higher to 187.6 million gallons. Biodiesel represents 81% of D4 production and renewable diesel accounts for 19%.  As stated earlier, total D4 production is 37.69 million gallons more than what was produced over the same period in 2016.  Interestingly, 37.06 million of that increase is comes from the renewable diesel industry.

Domestic production has accounted for 618.61 million of the 862.98 million D4 gallons produced in 2017.  244.36 million gallons were received as imports.  During May, it is estimated that 50.4 million biodiesel gallons and 11.9 million renewable diesel gallons were imported.

The EPA revised the April production totals higher, adding 2,290,008 RINs and 1,526,672 gallons to the D4 totals. During May, domestic production accounted for 263.95 million RINs, importers contributed 58.55 million and 35.44 million RINs were from foreign production. Month over month, domestic RIN production was up 44.68 million, importers increased 20.50 million, and foreign production increased by 5.40 million RINs.

INDUSTRY-RELATED NEWS

June 9 (National Law Review) Department Of Commerce Postpones Preliminary Determinations For Biodiesel AD/CVD Investigation – On June 5, 2017, the U.S. Department of Commerce’s (DOC) International Trade Administration (ITA) announced in the Federal Register that the preliminary determination in the antidumping (AD) and countervailing duty (CVD) investigations on biodiesel from Argentina and Indonesia will be postponed.  The preliminary determination will be due by August 21, 2017, and the final determination will be due within 75 days of the issuance of the preliminary determination.  Pursuant to Section 703(b)(1) of the Tariff Act of 1930, a preliminary determination is due within 65 days of the initiation of a CVD investigation unless DOC receives a request to postpone the determination from a petitioner, which DOC received on May 22, 2017.  The notice states that the petition was granted since there was no compelling reason to deny the request. READ MORE

May 31 (Biofuels International)  Neste renewable diesel sees Finnish consumers save 560 round the world flights worth of emissions –  Finnish consumers have already reduced emissions by an amount equal to 560 flights around the world, using Neste MY Renewable Diesel. This is despite the fuel only being released at the start of the year.  Neste MY Renewable Diesel is produced 100% from waste and residues, and was launched into the Finnish market at the start of 2017. Using the fuel, Finnish consumers have reduced greenhouse gas emissions by more than 1.5 million kg. This figure is equal to the emissions caused by 560 round-the-world charter flights for one person, or the annual emissions of more than 500 private cars. READ MORE

May 20 (Inside Climate News)  Trump Budget Would Wallop EPA’s Climate and Environment Programs –  Details of President Donald Trump’s 2018 budget proposal, leaked this week, reveal that the administration appears determined to wallop environmental programs, including many that tackle climate change. It would cut Environmental Protection Agency funding by nearly one-third, slash spending on renewable energy innovation, and eliminate the Greenhouse Gas Reporting program, among other programs. READ MORE