RIN prices fall sharply after news about RVOs, talk of refiner selling

Renewable fuel credit prices on Aug. 20 cratered to three-month lows amid published reports that federal government could lower its 2021 blending mandates below 2020 levels.

S&P Global Platts assessed D6 ethanol Renewable Identification Numbers for 2021 at $1.3075/RIN, down 23 cents day on day. Platts assessed D4 biodiesel RINs at $1.5025/RIN, 20.5 cents lower on the day. Both assessments were the lowest since May 17.

In a two-day span, 2021 D6 RINs fell 32 cents, while D4 RINs fell 28 cents.

RINs were already tumbling in the morning, with D6 RINs trading in the low $1.40s. Two market sources confirmed the early run on prices was spurred by word that refiners were selling RINs ahead of a possible announcement about the 2021 blending mandates.

Just before midday, published reports emerged that said the proposed mandates were headed to the White House for review. Shortly thereafter, a separate published report said that the mandates were expected to be below the 2020 mandates.

Prices continued to tumble.

The 2021 mandates were supposed to be approved by November 2020 under the regulations created by the Renewable Fuel Standard. However, the Trump administration, trying to find a solution palatable to both biofuel groups and refining interests, punted on the mandates.

The Biden administration similarly tried to find middle ground. On side is the biofuels industry, based primarily in the politically important Midwest, which supports increasing the biofuel mandates.

On the other side are refining interests, based in politically important states such as Texas and Pennsylvania, who say the blending requirements pose a financial hardship.

The EPA issues RINs 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.