US biodiesel exports hit a new record high in August at 96,792 mt, up 61% from July and almost double the volume from the same period of 2012, according to data the International Trade Commission released Monday.
Canada, at 41,155 mt, was the main destination for exports in August, followed by Malaysia, at 32,824 mt, and Spain, at 17,502 mt.
Cumulative exports in 2013 have amounted to 406,539 mt, 26% higher than the total exported during the same period in 2012. Canada remains the main destination of US biodiesel exports, with 221,289 mt exported to the country from January to August, up 8% from the same period a year ago.
Canada's growing demand is supported by the B2 federal mandate, with an increase in blending mandates in some provinces that was introduced in 2012 being felt in this year's demand.
Additionally, circular trade between the US and Canada remains strong as more competitive US prices encourage biodiesel exports to Canada while Canadian producers are able to export to the US, generate Renewable Identification Numbers and qualify for a tax break making the exported biodiesel more attractive than selling it domestically.
But the high export volumes to Malaysia and Spain came as a surprise. Exports to Malaysia totaled 70,645 mt until September, while cumulative exports to Spain reached 69,131 mt.
Market sources cited high freight costs and countervailing duties on US biodiesel imports into Europe as primary reasons preventing exports from the US to Europe, leading some to question how export volumes reached Spain.
According to the Renewable Fuel Standard regulation, when biodiesel is exported, RINs must be separated and retired, but sources believe some exporters are not complying with that obligation, while some sources argue that not all biodiesel exported is coming from producers who are approved to generate RINs.
There is some scope for those in the market to look to sell RINs from the exported product while prices remain supported with the intention of buying back the certificate when prices fall.
"Better for cash flow and [then] buying back the position needed for retiring," said a broker. US IMPORTS REMAIN STRONG US biodiesel imports in August totaled 71,246 mt, the second highest result this year. Biodiesel imports have soared in 2013 following reinstatement of the $1/gallon tax credit, which has turned imports into a profitable business for blenders.
The volume imported in August is 49% higher than July and more than 10 times the amount imported during the same period last year. Cumulative imports now stand at 390,761 mt, more than four times higher year-on-year
The main origins of imports in August were: Germany at 15,667 mt, Indonesia at 15,474 mt and Korea at 9,198 mt.
On a cumulative basis, the main supplier of US biodiesel imports until now is Indonesia with a total of 135,547 mt.
There were no imports from Argentina in August, continuing a trend seen in July and representing a significant drop from earlier in the year.
But line-ups show that volumes coming from Argentina are set to soar in the upcoming months, with more than 100,000 mt slated to be shipped between late October and mid-November.
To be eligible to generate RINs, importers must register and receive Environmental Protection Agency approval. Producers in Argentina have confirmed that although they have requested the EPA registration earlier in the year, it is still pending its approval.
"It seems it's a matter of time, but it's impossible to tell when this can happen", said one Argentinian producer.
