By Shariq Khan
NEW YORK (Reuters) – U.S. renewable fuel credits rose to the highest level in several months on Friday due to increased demand from refiners trying to meet mandates and higher soybean oil prices. This surprised traders who expected Donald Trump’s re-election as US president to weigh on the market.
Rising prices for the credits, known as Renewable Identification Numbers (RINs), are welcome news for biofuel producers who depend on them to offset high production costs. However, they also worsen the pain for petroleum refiners, whose profit margins have fallen sharply this year due to oversupply and weak demand.
Prices for both the D4 RINs, issued to producers of biomass-based diesel, and the D6 RINs, issued to ethanol suppliers, rose to 79 cents on Friday, traders said.
These are the highest levels since January, according to LSEG data.
The U.S. government mandates blending low-carbon fuels into the nation’s transportation fuel mix and issues RINs to companies that supply them. Refineries that don’t meet their targets can buy RINs from others or face fines.
Trump’s victory in this week’s U.S. election had led to speculation that small refiners will find it easier to get waivers on their RIN generation targets under his administration, OPIS analyst Tom Kloza said.
However, Trump has not yet outlined any plans to do so.
“There is uncertainty about whether Trump will reinstate widespread exemptions for small refineries, so some small refiners may be buying now to avoid being shortchanged,” said Alex Hodes, an analyst at energy brokerage StoneX.
Market participants also expect fewer RINs to be available for trading next year, partly due to stricter government mandates and weak fuel demand, which will reduce the blending of renewables, said Will Faulkner, founder of industry analytics firm Carbon Acumen.
Meanwhile, soybean oil prices also rose this week on expectations that Trump could impose tariffs on biofuel imports.
Higher commodity prices are undermining producers’ margins, causing them to price their RINs higher, said Paul Niznik, director of energy at consultancy Capstone.
