For the fifth time in the last six trading sessions, US 2013 biofuels renewable credits, also known as RINs, soared to record-high levels on Monday.
Sources said the strength in the market continued to be driven by aggressive buying interest from obligated refiners needing to meet their Renewable Fuel Standard target.
"Buyers are spooked right now," one biofuels trader said. "They're spooked that tomorrow will be even higher."
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Platts Biofuelscan is a daily report, covering the latest worldwide biofuel news and prices. It provides a daily summary of market events and developments, along with closing market price assessments from the Americas, Europe, and Asia. Platts Biofuelscan includes prices assessmenst for ethanol, ETBE, renewal indentification number (RIN) biofuels (US market0 and biodiesel. It also includes graphs depicting historic and current trends for major assessments.
Biomass-based diesel (D4) RINs, advanced biofuel (D5) RINs and corn-based ethanol (D6) RINs for 2013 were each assessed at record highs of $1.33/RIN, $1.33/RIN and $1.32/RIN, respectively. The biodiesel RINs assessment jumped 9 cents, the advanced biofuel assessment gained 10 cents, and ethanol RINs were assessed 12 cents higher.
Platts first started assessing 2013 biofuels RINs on January 2, 2013.
The driving factor -- ethanol RINs -- have soared 27.75 cents week on week, primarily on the back of the impending "blend wall," according to players, which is a major issue, as the US Environmental Protection Agency still had not announced any revisions to 2013 biofuels production targets.
Sources said Monday the likelihood of any revision to the mandate had grown and was now "extremely slim."
Early Monday morning, bid-offer ranges for 2013 ethanol RINs were first reported at $1.18-1.25/RIN. Shortly afterwards, 500,000 2013 ethanol RINs were heard to have traded at $1.24/RIN for any-August transfer.
Over the next three hours, ethanol RINs for 2013 were reported to have traded twice more at $1.24/RIN, twice at $1.25/RIN, once at $1.26/RIN, once at $1.28/RIN, twice at $1.29/RIN and twice at $1.32/RIN.
At time of assessment, they were heard bid at $1.31/RIN against "not many offers left right now," one biofuels broker said. Biodiesel and advanced biofuel RINs were talked at a 1-cent premium to ethanol RINs as sources said the spread had narrowed to its threshold.
Since biodiesel and advanced biofuel RINs can be used to meet the ethanol blending mandate, they cannot technically be valued below ethanol RINs, based on intrinsic energy values.
The blend wall, which some observers think could be hit this year, describes when the maximum amount of the US gasoline pool has been blended with 10% ethanol. Refiners will then be under pressure to run higher ethanol blends, buy RINs or push for Congress to alter the Renewable Fuel Standard.
The EPA issues a RIN to track renewable fuel usage throughout the supply chain.
Refiners, importers and blenders -- called "obligated parties" -- use them to show the EPA that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.
--Jordan Godwin, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com