Early tumble in RIN prices leaves market looking for answers

Source: By Wes Swift, Platts • Posted: Friday, August 12, 2016

Houston (Platts)–10 Aug 2016 612 pm EDT/2212 GMT

Renewable Identification Number prices plummeted nearly 10 cents in early trading on Wednesday morning, leaving traders at a loss to explain the sudden drop.

“No idea,” said one broker when asked what was behind the decline. Another source described the market Wednesday morning as “volatile and not sure why.”

D6 ethanol RINs for 2016 traded as low as 74 cents/RIN Wednesday morning after being assessed at 83.5 cents/RIN on Tuesday afternoon. The drop sparked a flurry of buying, and shortly after 9 am CED, 2016 ethanol RINs had risen to 77 cents/RIN. By 9:30 am, 2016 ethanol RINs were trading at 80 cents/RIN.

Biodiesel RINs saw a similar drop, trading as low as 84 cents/RIN after being assessed Tuesday at 91.75 cents/RIN.
RIN prices surged in late June and early July after a report from Goldman Sachs predicted that RIN stocks would decline by 50% by the end of 2017 due to higher federal blending mandates. The same report projected that 2016 D6 RIN prices would average more than $1/RIN in 2017.

But RIN prices began to slide in late July, after the US Environmental Protection Agency released data showing production and RIN generation for biodiesel and ethanol at record levels through the first six months of 2016.

But the dramatic drop on Wednesday morning still left some brokers and traders shaking their heads.

“I love this business, but it’s really weird sometimes,” said one source.