Current-year corn-based ethanol RINs rose to a six-week high Monday amid steadily improving buying interest.
Corn-based ethanol (D6) RINs were assessed 1.75 cents higher at $0.2975/RIN, the highest since October 21.
Current-year ethanol RINs were heard traded at $0.28/RIN, $0.29/RIN and last at $0.2950/RIN. They were last reported in a tight bid-offer range of $0.29-0.30/RIN at the 3:15 pm EST assessment.
The assessment consistently hit Platts record lows for much of November, as traders braced for the proposed target mandates for the 2014 Renewable Fuel Standard. The US Environmental Protection Agency released those figures November 15, which showed a significant scaling back from the original targets.
"Some obligated parties had deferred purchases ahead of the release, and that created a little pent-up demand that has led to the recent pop," said David Dunn, CFA at Progressive Fuels Limited. "On the other hand, the natural net longs (or RIN sellers) were selling RINs when they purchased the ethanol for blending so there wasn't an equal build-up in sellers to match the build-up in buyers."
RIN prices soared for much of 2013 on aggressive buying ahead of the pending "blend wall." The term describes when the maximum amount of the US gasoline pool has been blended with 10% ethanol. Refiners would then be under pressure to run higher ethanol blends or buy RINs.
The EPA issues a RIN to track renewable fuel usage throughout the supply chain.
Refiners, importers and blenders -- called "obligated parties" -- use them to show the EPA that they have fulfilled their government-mandated use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.
