Persistent volatility drives consistent uncertainty for renewable diesel and biodiesel producers. With increased regulatory action and production growth on the horizon, alongside mounting geopolitical tensions, stakeholders need a weekly insight into their operational costs and returns.
US renewable diesel (RD) margins were mixed as late-week diesel strength was met by losses in credits and feedstocks. Credit losses weigh on RD margins, while declines in feedstock pricing are supportive of RD margins.
Biodiesel margins gained traction as the soybean oil to heating oil (BOHO) spread recovered on diesel strength and long overdue declines in soybean oil (SBO) pricing.
Used Cooking Oil (UCO) remained the highest returning feedstock last week as turnarounds and imports continued to pressure the waste oil market. Soybean oil RD margins posted the only increase for the week.
D4 RINs provided material headwinds to the margin environment as the 2023 vintage D4 biomass-based diesel prices softened. Bullish comments to the EPA from the advanced biofuels from the week prior proved overdone, prompting a lack of refiner buying.
The California Low Carbon Fuel Standard (LCFS) market corrected downward as buying following the prior week’s hawkish workshop proved overdone, while a structural oversupply dominated the marketplace.
Parkland Corp. announced its decision to halt its renewable diesel project in British Columbia, Canada. The company had been coprocessing at its Burnaby Refinery with plans to build a 273,000 gallons/yr RD facility, set to come online in 2026. The company cited rising feedstock costs and advantages to US producers afforded by new credits carved out in the Inflation Reduction Act (IRA). The move could be a harbinger of slowing momentum for the RD industry which has increasingly worried about rising feedstock costs, while the numerous advantages of the US market is likely to open export markets soon.