By Jamie Martin
Renewable fuel credits in the U.S., known as Renewable Identification Numbers (RINs), have surged to multi-month highs, catching traders and the market off-guard.
This rise occurred despite the reelection of President Donald Trump, which many speculated would depress the market due to potential regulatory relaxations favoring small refineries.
Last Friday, prices for D4 and D6 RINs, essential for biomass-based diesel and ethanol producers respectively, peaked at 79 cents, the highest since January, per LSEG data. This price hike is linked to increased demand from refiners needing to meet strict blending mandates and a spike in soyoil prices.
Tom Kloza, an OPIS analyst, suggested that Trump's win might lead to easier exemption obtainment for small refineries, although no official plans have been announced yet.
The uncertainty surrounding these exemptions might be prompting small refiners to secure RINs now to avoid potential shortages, as noted by Alex Hodes from StoneX, "There’s uncertainty around whether Trump will reintroduce widespread small refinery exemptions."
Further complicating the RINs landscape are predictions of fewer available credits next year due to tighter mandates and reduced fuel demand impacting renewable blending rates.
Simultaneously, soybean oil prices have risen on anticipations that Trump might impose tariffs on biofuel feedstocks, thus pressuring producer margins and inflating RIN prices.
Paul Niznik, from consultancy firm Capstone, highlights that higher feedstock prices necessitate higher RIN pricing to maintain producer viability.
This intricate balance of policy, demand, and market speculation continues to drive the renewable fuel credit market in unexpected directions.
Photo Credit: photo-credit-vista-mipan
Categories: National