US renewable diesel market faces shifting tides amid market uncertainty

Ongoing market uncertainty, driven by regulatory changes and international trade tensions, is significantly impacting the US renewable diesel and biodiesel sectors.

Several factors including the transition from BTC to 45Z, potential antidumping duties on RD imports to Canada, threats of tariffs from the Trump administration, and possible retaliatory tariffs from China and Canada have forced many biodiesel and renewable diesel production facilities to either scale back operations, shut down entirely or switch back to fossil diesel.

In January 2025, RIN generation data pointed toward an RD production of 215.66 million gallons, down 14.55 million gallons, or 6.3%, from a year ago, according to the US Environmental Protection Agency.

US RD exports in January totaled 31.836 million gallons, up 95% from the same month in the previous year, according to US Customs export data. The primary destination for these exports was the Netherlands, which received 30.366 million gallons, followed by the United Kingdom, at 1.47 million gallons.

With the transition from a blenders tax credit to a producer tax credit, a decline in imports was anticipated. No RD imports were registered in January.

Platts, part of S&P Global Commodity Insights, assessed Los Angeles renewable diesel (99%) price at 248.4 cents/gal on March 14, down 2.47 cents from March 13, and RD100 LA price at 430.88 cents/gal on March 14, down 2.9 cents from the previous day.

UCO imports increased

Used cooking oil imports increased, reaching 605.5 million pounds in January, up 13.3% from the same month last year. In January, UCO imports from China represented 38% of the total imports. Though 2024 UCO imports from China represented 52% of total UCO imports, as China is the largest source of US UCO imports so far.

Despite the strong UCO imports in January, arrivals could slow down in the coming months as preliminary guidance shows that imported UCO is not eligible for the RD CFPC, and tariffs on UCO imports from China would make Chinese UCO less competitive in the US biofuels industry.

Although the CFPC's initial guidelines do not classify UCO imports as eligible for credits in RD production, UCO imports can still receive credits through CORSIA pathways for sustainable aviation fuel production.

An increase in domestic UCO prices could make imported UCO more affordable, even considering the CFPC. The Platts Houston UCO price averaged 47.7 cents per pound in January 2025 and 51.6 cents per pound in February. Given a UCO yield for RD of 9.41 pounds per gallon and a CFPC of 32.48 cents per gallon, the break-even points for the imported UCO price are 44.3 cents per pound for January and 48.18 cents per pound for February. US Customs data indicate that UCO imports from China averaged 44 cents per gallon during January and February.

Tallow imports started the year low

Tallow imports decreased, ending at 177.5 million pounds, down 9% from the year-ago month. Domestic tallow supplies are expected to tighten in the US due to lower cattle slaughter in 2025. S&P Global Commodity Insights analysts expect strong tallow imports in the year to offset domestic supply constraints. Preliminary guidance suggests that, unlike imported UCO, imported tallow would be eligible for the CFPC which would shift more demand to tallow.