[RE]fuel Market Report Commentary

For the third week Year 10 RTFCs were unchanged, to be assessed at 15.3 p per certificate as market sources reported further small trading volumes occurring at that level this week.

Year 11, which have been largely dormant through the early part of 2018, did move up marginally, with sporadic bids heard at 16 p and fleeting offers holding around 17 p, although appetite to trade remained largely absent, in spite of the RTFO flawlessly clearing its first major hurdle en route to the statute books.

Week-on-week, mineral oil prices continued their rollercoaster, with underlying diesel values falling some $30/mt, which again enabled space for biodiesel premiums to climb into.

That brought the third week in which the theoretical cap on certificate prices moved up, but the practicalities of putting to bed Year 10 and the lingering uncertainties around the still-to-be-finalised RTFO continued to put a dampener on activity.

“We’re expecting it to go through, it’s still got to go through the Lords yet but we’re expecting it to happen,” one market source said, musing on changes to trading patterns in recent months versus the more established seasonal patterns that certificate trading has experienced in the past.

“What normally happened at this time of the year is people used to start thinking about where they would get their tickets from in the new year from January… The fact that there’s been doubt has probably slowed it,” the source said.

The more immediate problem starting to occupy minds now is the impending pick up in mandates from 4.75% to 7.25% in little over a month’s time, although the changes – if delivered as envisaged – are unlikely to see differentiation in pricing terms between waste-based certificates and crop-based.

“Crop is a small enough percentage already, so it won’t make any difference in price terms,” the trading source said.

The RTFO legislation now moves to debate in the House of Lords on March 6, the final step before the statutory instrument becomes law.