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California LCFS rally resumes, PRIMA LCFS Index hits $80

PRIMA’s California LCFS Index jumped $5 on Tuesday as credits traded at $80,  leaving offers moved back firmly into the $80s and bids walked up to $79. Many market participants expect credit prices to remain well supported as the size of California’s carbon cutting mounting looms post-2016 following September’s reconfirmation of the scheme.

EIA on Tuesday said US crude production dropped to its lowest in a year at 9mn b/d, pushing heating oil prices above $1.60/gal. EIA short range forecasts for US biodiesel production sat flat at 92,000 b/d, with domestic ethanol output forecasts also flat at 900,000b/d. Bean oil prices on Tuesday sustained the rally seen since the start of October, indicating rising input costs for soy-based producers. Palm oil meanwhile has rallied 25% from its late August lows, which will invariably hike replacement costs for low-CI Singapore-origin imported renewable diesel into California.

California’s biodiesel blenders meanwhile have been cheered by California’s recent approval of a biodiesel tax refund bill that will require the state to refund taxes paid on biodiesel blended with tax-exempt diesel fuel.  The estimated overpayment of tax jumped from $77900 in 2012-13 to $2.8 million in 2013-14.

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