RIN Prices Hit $1 Mark as Biodiesel Margins Remain Under Pressure

Q2 opens with a significant milestone as D4 RINs have climbed to $0.995, effectively touching the $1 threshold for the first time since 2022. This isn't merely symbolic – it indicates mounting compliance pressure as advanced biofuel balances continue to tighten. However, despite strengthening credits, US biodiesel margins remain stubbornly negativeat -$0.23/gal and are projected to worsen to -$0.30/gal by July. The forward curve maintains its carry structure while producers continue struggling with poor blend economics, even in the face of rallying RINs.

The European market presents a more positive price picture on the surface, but these headline margins are misleading. Biodiesel values continue to hold at elevated levels: RME at $1,324/mt (gross margin $136/mt), F0 at $1,317/mt ($97/mt margin), and UCOME leading the pack at $1,556/mt ($321/mt margin). While these spreads appear healthy, market engagement is actually declining. ICE paper trading volumes fell dramatically in week 13, with RME down 75% from the previous week and F0 dropping 37%. Only UCOME saw positive movement with a 25% increase. Overall, RME and F0 paper activity decreased by 55%, indicating that margin strength is obscuring reduced liquidity and lower blending volumes.

ICE Bio paper volumes

Further complicating the European landscape is the ongoing traceability debate. Intensifying regulatory scrutiny raises concerns about potential rollbacks in double-counting provisions, particularly for waste-based fuels such as UCOME and perhaps some category changes for Annex IX products. I maintain that double-counting is unlikely to survive in its current form. Any withdrawal could rapidly erode waste-based biodiesel premiums, fundamentally altering blending economics and narrowing the gap with crop-based alternatives. The current margin structure remains highly vulnerable to regulatory decisions.

On the feedstock front, the USDA's recent acreage report confirmed a reduction of 4 million soybean acres compared to last year, yet futures increased despite a 65-million-bushel rise in March 1 stocks. This resilience reflects deeper concerns: the global stock-to-use ratio remains near 30%, supporting a cautiously bullish outlook. In Brazil, soybean and corn origination costs stay elevated, with constrained logistics and softer FOB demand capping margins, even as flat prices hold relatively steady across ports.

Looking ahead, capacity expansion continues to reinforce the broader renewable fuels narrative. Based on mid-range feedstock availability and 80% utilization rates, the market can support 9.6 billion advanced RINs (D4/D5) in 2026 – substantially higher than 2024 levels. Even under a more conservative 70% utilization scenario, 9.1 billion RINs remain achievable. Feedstock supply isn't the constraint; policy and economics are the true variables. Future developments will hinge on the speed of regulatory clarity – especially in Europe – and whether current price signals carry sufficient weight to revitalize participation throughout the value chain.