Prices for 2012 and 2013 US ethanol renewable credits, also known as RINs, on Monday reached their highest levels in four weeks on the heels of weak biofuels production data released by the US Environmental Protection Agency Friday, sources said.
The EPA 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.
Platts assessed 2012 and 2013 ethanol RINs on Monday up 11 cents each to 80 cents/RIN and 86 cents/RIN, respectively, the highest levels since March 11 for both RINs markets.
Regarding low production, US monthly ethanol production fell in February, according to EPA data released Friday, with monthly physical ethanol and RINs output at the lowest level recorded by the EPA.
Monthly ethanol production -- categorized by the EPA in the renewable fuel (D6) category consisting of corn-based ethanol, the main type produced in the US -- dropped 88.04 million gallons in February, or 8.58%, to a record-low 937.617 million gallons, according to data on the EPA's Moderated Transaction System website. That is the fourth straight month of decline.
The previous monthly record low was in September, when ethanol production was at 983.9 million gallons. The EPA first started tracking monthly biofuels production in July 2010.
The total 2013 ethanol production target for the Renewable Fuel Standard-2 mandate was set by the EPA in February at 13.8 billion gallons, so year-to-date production was at 14.2% of the total mandate with 10 months left in the year.
Corn-based ethanol RINs production in February was also at its lowest recorded monthly level of 937.62 million RINs, down 88.037 million RINs from the previous month.
2012 ethanol RINs were heard traded Monday at 72 cents/RIN, 73.5 cents/RIN, 79 cents/RIN and 80 cents/RIN. The trade at the 80-cent level was the highest reported deal for 2012 ethanol RINs since March 8.
2013 ethanol RINs were heard transacted at 77 cents/RIN, 82 cents/RIN, 80 cents/RIN, 81.5 cents/RIN, 83 cents/RIN, 85 cents/RIN and 86 cents/RIN. The deal at the 86-cent level was the highest reported trade since March 13.
The Platts assessment Friday for 2012 and 2013 ethanol RINs was at 69 cents/RIN and 75 cents/RIN, respectively.
