US biodiesel producers will be hoping their strong run in the third quarter, confirmed by last week’s monthly EIA data update, carries through the remainder of the fourth quarter as EPA’s end-November deadline for finalizing its revised RVO blending targets looms. EPA sent its proposed 2014-2016 blending targets to the White House Office of Management and Budget for review on October 30. EPA’s May release of its biodiesel-friendly biomass and advanced biofuel mandates confirming a 2.9bn gal combined advanced biofuel mandate for 2015 acted as a major short term stimulus to D4 RIN prices and biodiesel production, accompanied by a summer surge in RIN-generating biodiesel imports into the US.
US biodiesel production hit a yearly high in August, continuing July’s growth run. August output was up around 2mn gal MoM to 123mn gal, leaving January-August 2015 production total at 838mn gal, up by 5% on the same time a year ago. Nationwide biodiesel plant utilization edged up to 71%, compared with 70% in August 2014 and 72% in August 2013. Soybean oil saw its contribution to US biodiesel output as a feedstock rise by 4% MoM, slightly lower than the overall 5% rise in US biodiesel output. White grease saw the fastest growth as a US biodiesel production input in August, gaining 10% MoM and 50% YoY. Corn oil consumption grew by 18.6% YoY to 108 mn lbs in August.
A slowing biodiesel import market acted as a further third quarter boon to US producers. Biodiesel imports witnessed a 20% MoM drop between July and August, ITC data shows, cutting declared imports in August to 39 mn gal. September EMTs data reported 31.5mn gal of D4 RIN generating imports, down 34% MoM. The drop in imports chimes with the plunge in biodiesel imports from Argentina, with around 24mn gal of biodiesel lined up in Argentinian ports to ship to US in September, down 29% MoM.
A late-year rebound in imports could dampen the otherwise rosy scenario for US producers. Anticipation of a re-instated blenders’ credit is already acting as a lure to Argentinian exporters, with 32mn gal of biodiesel lined up to ship to the US in October. Overall imports last year surged to a yearly high of 37mn gal in November alone before dropping back to 23mn gal in December as shippers scrambled to beat the expected 31 December deadline to receive the blenders’ credit. EMTS data shows 331mn gal imported in 2014, leaving importers needing to ship just 19mn gal in October-December this year to beat last year’s import total.