US 2011 biodiesel credit prices soar as deadline nears

17 February 2011 22:08  [Source: ICIS news]

HOUSTON (ICIS)--Prices for US 2011 biodiesel (B11) Renewable Identification Numbers (RINs) soared in Thursday trading because of an approaching compliance deadline that falls on the end of February, traders said.

RIN trading is a hedging tool for companies required to meet 2011 biodiesel blending volumes, set by the Renewable Fuel Standard 2 regulations.

RINs operate like credits, in that companies required to comply with the regulations can either buy RINs or actual volumes of biodiesel.

B11 RINs hit a confirmed high of $1.25/RIN (€0.93/RIN) on Thursday, with $1.27/RIN heard, but not confirmed by traders in finished business. The B11s traded at 98-99 cents/RIN at the same time last week.

RINs were trading in the 90s cents/RIN during January and early February compared with trades done in the low-to-mid 70s cents/RIN in late December - when the $1/gal federal tax credit for biodiesel blending was extended into 2011 and made retroactive for 2010.

Traders said the run-up in B11 RINs prices was taking place ahead of the end-February compliance deadline for filing because US biodiesel production is still at a fraction of capacity and obligated parties are racing to purchase the RINs in lieu of the biofuel.

($1= €0.74)

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By: Judith Taylor
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