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Americas Energy Ethanol

Macro volatility softens California LCFS sentiment

Mid-market prices for LCFS credits dipped 50¢ on Tuesday as sellers bowed to the wider market selloffs of the past few days and dropped their offers against much lower bids. Sell side indications fell to $67 on Tuesday, down $1 from Monday’s levels, but failed to coax buyers any higher than $60, leaving assessed mid-market value at $63.50.

Since mid-August value indications for LCFS credits have still held comfortably above $60, well above the market average of $54 seen in the first two weeks of the month. Increased trading interest from a more diverse array of refiners and fuel importers have boosted liquidity in August MoM.

Higher LCFS prices have focused attention on the workability of Brazilian ethanol imports into California in order to monetize the relatively high carbon savings awarded to sugar cane production pathways under the LCFS methodology. High transportation costs are still working against the Brazilian arbitrage into California however.

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