U.S. Buyers Scoop up Brazilian Ethanol Amid RIN Revival
by Chris Prentice (Reuters) Oil traders are rushing to import ethanol from Brazil for the first time this year after U.S. regulators moved to increase use of advanced biofuel, opening a wide spread in the niche biofuel credits market.
The premium for Renewable Identification Number, or RIN, credits tied to “advanced” biofuels – such as Brazil’s sugar-based supply – versus corn-based ethanol RINs, soared to its highest in over two years in the two weeks since the Environmental Protection Agency proposed higher-than-expected targets for use of fuels made from vegetable oil and plant waste.
As the spread trebled to 30 cents, importers, including Vitol SA and Morgan Stanley, moved to cash in on an opening arbitrage, scooping up as much as 40,000 cubic meters, or 10.6 million gallons, of Brazilian fuel ethanol in the last two weeks, U.S. market sources said. It was the biggest spate of buying so far this year, they said.
Morgan Stanley and Vitol have purchased shipments of around 10,000-15,000 cubic meters each destined for Hawaii and Florida, respectively, according to market sources. A third energy company has also bought one shipment, one source said. READ MORE