California LCFS prices climbed back to the previous week’s close of $66.75 on Tuesday, gaining 50 cents from Monday. Buyers upped bids by $1 from the previous session to $65, while sell side indications trod Monday’s range at $68.50. D5/D6 spreads tightened another 2 cents/gal as both D6 and D5 reached fresh 2015 lows of 37.75 cents and 47.5 cents respectively. Expectations of a Fall reconfirmation of the LCFS scheme are continuing to buoy prices as higher state carbon caps loom in the 2020 run-up.
Higher LCFS prices will likely keep growth strong growth in west coast biodiesel output. West coast PADD production already jumped 58% YoY in the first half of 2015 even before LCFS prices surged in July, according to fresh EIA data, hitting 49mn gal in the recent half year period.
Out of state biodiesel plants that use corn oil as a fuel pathway are among the top beneficiaries of the the LCFS program. Corn oil biodiesel has a CI value of 4, making it eligible for LCFS credits worth 68 to 70 cents/gal at current market values.