Prices for 2012 and 2013 US ethanol renewable credits, also known as RINs, on Monday fell to their lowest levels in March on slowing demand from obligated parties, sources said.
On Monday, 2012 and 2013 ethanol RINs were assessed at 57.5 cents/RIN and 64 cents/RIN, respectively. On February 28, 2012 ethanol RINs were assessed at 47.5 cents/RIN while their 2013 counterparts were assessed at 56/cents/RIN.
The US Environmental Protection Agency issues RINs to track renewable fuel usage throughout the supply chain.
Refiners, importers and blenders -- known as "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. EPA categorizes corn-based ethanol as a "D6" biofuel.
Assessments for 2012 and 2013 ethanol RINs have been sliding since hitting all-time high levels on March 8, when 2012 ethanol RINs were assessed at 89 cents/RIN and 2013 ethanol RINs were assessed at 102 cents/RIN.
Platts first started assessing 2012 ethanol RINs on January 3, 2012, while 2013 ethanol RINs were first assessed on January 2, 2013.
The record ethanol RINs prices were due to the impending "blend wall," multiple sources said.
Currently, most non-flex-fuel vehicles are allowed to run E10, or a 10% ethanol-gasoline mix. Some model years are also approved by the EPA to run E15.
The "blend wall," which some observers think could be hit this year, is a description of a time when the maximum amount of the US gasoline pool has been blended with 10% ethanol. Refiners will then be under pressure to run higher ethanol blends, trade RINs or get Congress to alter the Renewable Fuel Standard.
The recent decrease in ethanol RINs prices, however, was attributed by sources to reduced demand from obligated parties.
A veteran ethanol trader said that it "just seems like buying from obligated parties has slowed down as blending starts to pick up."
An ethanol broker said, however, that he thinks demand from obligated parties could regain strength later in the year.
The obligated parties were "waiting to at least see what the 2013 final Renewable Volume Obligation is," he said.
