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LCFS steady as sugar cane ethanol remains scarce

California LCFS credits traded at $97.50 in the first trading session of this week. The best offer sat at $100, marginally higher than the best offers from last Friday, while buy side interests kept in a range between $95 and $97. PRIMA’s California LCFS index finished at $97.50, in line with the previous session.
Brazilian sugar cane ethanol with an LCFS friendly CI of 58.4 remains a rarity in California. Fresh USITC data showed zero imports of Brazilian ethanol for Q3, while CARB didn’t report any Brazilian ethanol contribution towards first half credit generation. Brazilian anhydrous ethanol meanwhile has seen major price gains, up 18% MoM,  to sit at $2.02/gal. Petrobras maintains it has more than halved its refinery output losses to 115,000bl/d from 273,000b/d a week ago, although fears linger that strikes could worsen this week. This could potentially reduce the demand for anhydrous ethanol for gasoline blending, as cheaper hydrous ethanol can substitute directly for any gasoline supply shortfall.

Meanwhile interest remains strong for Midwest ethanol destined for north California delivery in November and December, as mid-market value indications were heard hovering around $1.62/gal from the end of last week till Monday. The LCFS premium for Midwest ethanol with a CI value of 90.1 sits above 6.21 cents at the LCFS credit price of $97.50, compared with current 2015 D6 RIN value of 41.75 cents/gal.


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