The renewable identification number (RIN) market showed some resiliency in the face of a declining bean oil/heating oil (BOHO) spread this week. The BOHO spread fell by 13% on Friday June 14, while RIN prices managed to climb by 2%.
A falling BOHO spread signals a less challenging economic environment for biodiesel and renewable diesel production. When the BOHO spread moves lower, RIN prices tend to decline, since profitability is improving. RINs generally cover the gap between profitability and loss, incentivizing production within the market.
In recent months, the RIN market has been quoted as “being broken” or out of step with the BOHO. Market observers have pointed out that RIN prices would often outpace a falling BOHO and lag the increase in a rising BOHO market.
D4 RIN prices gained 2% in value, closing just over 55 cents per RIN this week. Year to date, D4 RIN prices are down 29%.
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