[RE]fuel Market Report Commentary

After a dogged rise on the back of firmer crude values, diesel prices seemed to have settled into a rut with week-on-week changes for low sulphur diesel showing a modest $2/mt fall to $610/mt.

With pressure maintained on biodiesel prices, however, the differential between biofuel and mineral fuel continued to be squeezed, applying further pressure to RTFC certificates, which continued to retreat on a familiar cocktail of winter blending cutting demand for certificates and plunging theoretical values.

Year 10 and 11 values saw bids and offers tighten up as the cap tightened, with brokers and market sources reporting bids at 17 p and offers at 18 p.

Energy Census assessed in the midpoint between the bid-offer range at 17.5p, bringing both Year 10 and 11 certificates to parity based on feedback from market participants.

That remained above theoretical values, with the theoretical cap to RME falling to 17.68 p/litre with FAME 0 at 14.17 p/litre, according to Energy Census data.

“I think the value of a certificate at the moment, based on physical, is somewhere between 15 and 16 p, so I’m not trading at the moment,” one market source said.

While the fundamentals remained familiar, there was at least movement on a legislative concern that has been hanging over the market.

The UK government confirmed this week that it would be using a legislative vehicle called a Statutory Instrument, to streamline the changes to the RTFO that are required to be on the books by April.

Draft legislation has now been placed before the House of Commons, where it will be considered by a committee, before passing to a second committee in the House of Lords.

That should complete the parliamentary journey for the changes that enshrine the increase in mandates to 12.4% and delineate the biofuel supply into crop-based, waste-based and advanced.

MP Nic Dakin - head of the All-Party Parliamentary Group for British Bioethanol - told Energy Census that he expected the legislation to be complete by the  end of January, although a spokesperson from the Department for Transport was unable to comment