Trading in the US interior was sharply lower this week on a big drop in the renewable fuel credit prices. Renewable Identification Numbers (RINs) are credits used for compliance under the US Federal Renewable Fuel Standard (RFS) program and are generated by renewable fuel producers that have registered and approved pathways with the US Environmental Protection Agency (EPA). An oversupply of RINs in the market relative to the mandated blending levels has sparked a selloff in the market and prices are off 37 percent over the last four weeks, down the equivalent of approximately $240 for a tonne of renewable diesel.

Additionally, lower heating oil (ULSD) futures prices have combined with the lower RIN prices to pressure renewable fuel margins at or near negative levels. As a result, some biodiesel producers have slowed production and those still active in the nearby market have cut their bids significantly in an effort to claw back some margin.

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