California hop diffs mixed amid waterborne trade. California head of pipeline (hop) R99 differentials were mixed this week, although plentiful renewable diesel (RD) supply from the midcontinent and US Gulf coast is expected to continue to weigh on prices.

California R99 head of the pipeline differentials rose by 2¢/USG against a CARB ULSD + attributes basis in Los Angeles and fell by 10¢/USG against a CARB ULSD + attributes basis in San Francisco. The lows were based on 1H February trade for delivered duty paid waterborne volumes with buyer's option plus a premium for terminal fees at the head of the pipeline, while the highs were set based on February offers in Los Angeles and San Francisco. Differentials for deliveries by rail into California shipping in Q1 were offered 1¢ higher against a heating oil basis compared to the prior week.

Supply from abroad continues to make its way to California. Argus vessel tracking data currently indicates three vessels carrying a maximum of 492,000 bl of renewable diesel inbound to California. The STI Manhattan is set to deliver up to 240,000 bl from Singapore into Richmond on 26 January, while Los Angeles is set to receive the Largo California on 31 January, with as much as 78,000 bl of RD from Singapore. On 3 February, the Easterly Birdie is expected to deliver a maximum of 174,000 bl from Indonesia to Stockton.

A narrowing San Francisco R99-B99 spread in the fourth quarter shows that RD was more competitively priced against biodiesel (BD). San Francisco B99 biodiesel averaged 50¢/USG lower than RD in the fourth quarter compared with 112¢/USG lower in September. Participants estimate that if the discount were to reach 25-30¢/USG, blenders would be disincentivized to blend BD with RD. The BD/RD spread in San Francisco ended the week at 53¢/USG.

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