US biodiesel price ranges become more narrow

17 February 2012 00:13  [Source: ICIS news]

BOGOTA (ICIS)--US biodiesel bids and offers in the midwest were assessed narrower this week, sources said on Thursday.

Prices of soy methyl ester (SME) B100 were assessed at $4.45-4.55/gal FOB (free on board) midwest compared with an assessment of $4.40-4.55/gal for the previous week.

SME B100 US Gulf prices were assessed lower at $4.66-4.76/gal FOB compared with an assessment of $4.67-4.77/gal for the previous week.

Fatty acid methyl ester (FAME) domestic bids and offers in the midwest was assessed at $4.40/gal compared with an assessment of $4.33-4.43/gal for the previous week.

Pricing remains high enough for solid margins, despite the expiration of the $1/gal tax credit, market sources said. The credit expired on 31 December.

Uncertainty among market players regarding the fate of the subsidy remained at the forefront of discussions this week.

US biodiesel sources said that if the $1/gal tax credit is not reinstated, there will be very little margin for anyone, including producers and brokers.

The market will see plants shut down and production decline sharply and ultimately the second Renewable Fuels Standard (RFS2) legislation will not be met. Under a law signed in 2007, US refiners are required to use 15.2bn gal of renewable fuels by 2015.

When the credit lapsed in 2010, several plants shut down as production plummeted to the lowest level since 2006.

By: Leela Landress
+1 713 525 2653

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