Shifting incentives bring uncertainty, limit liquidity in spot California R99 markets
Summer has brought record low R99 cash prices — and nearly 3.2mn bl of vessel-supplied renewable diesel — to key California distribution hubs, but those seeking to take long-term supply positions must grapple with changing incentive programs and yet unseen consequences for supply flows.
Looking ahead to the end of 2024, the future of RD supply is murky. Changing credit eligibility could discourage the volume of imports the west coast has grown accustomed to, domestic refining margins at the US Gulf coast have been indicated on the decline for much of the year, and a volatile underlying CARB diesel basis increases participants’ exposure to price risk.
Cash prices for R99 at the head of the pipeline (hop) in Los Angeles hit their lowest level in Argus series history on 6 August, when a downturn in the underlying CARB diesel basis pressured values to just $2.35/USG. The price slide, coupled with anecdotally unworkable spreads to local rack prices, weighed heavily on activity this summer, despite a steady stream of offshore shipments.
Deliveries via vessel to northern California in August were the second highest in Argus history at an estimated 741,000 bl — the latest in steady monthly increases since June — per data aggregated from bills of lading and global trade and analytics platform Kpler. Jones Act vessels from the US Gulf coast alone accounted for 448,000 bl, while shipments ex-Singapore constituted the remaining volume.
Southern California received an estimated 847,000 bl, almost evenly split between offshore suppliers and those at the US Gulf coast.
But the future of renewable diesel supply flows into California is mired with uncertainty surrounding incentives for both importers and domestic refiners. The BTC is set to expire with the 2024 calendar year, giving way to the IRA’s Clean Fuel Production Credit. The change would heavily favor US-based renewable diesel production and reduce awards for high-volume offshore imports to the US west coast, the latest pivot for an adolescent market that has struggled to achieve supply equilibrium.
Waterborne renewable diesel deliveries to California ports
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Neste — the leading offshore supplier of US R99 — is also slated to undergo turnarounds at both its Rotterdam, Netherlands, and Singapore facilities this quarter, followed by a second short-term Singapore turnaround in the fourth quarter. But the import lineup so far does not reflect a disruption in deliveries to the US this quarter.
At home, refining margins at the US Gulf coast are indicated on the upswing after narrowing through early August.
Renewable diesel deliveries to the west coast by rail from other US regions reached a record-high of nearly 2mn bl in May, per data from the Energy Information Administration (EIA). Shipments by vessel are also trending higher, with an estimated 864,000 bl delivered to California in August — the highest since November.
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Spot R99 markets in California were little tested at the end of August, although both the Los Angeles and San Francisco markets drew support from a controversial surprise proposal to limit California Low Carbon Fuel Standard credit generation for renewable diesel made from soybean or canola oils. The California Air Resources Board will also consider a one-time tightening of annual carbon reduction targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023, per a 12 August release.
But an unsteady economic landscape for domestic production remains a key decision-driver among US refiners.
Vertex Energy will begin reversing a renewable fuels hydrocracking unit back to conventional fuel feedstocks this quarter at its 88,000 b/d Mobile, Alabama, refinery. The company at the time cited headwinds in the renewable fuels market that it expects to persist through 2025.
Author: Jasmine Davis, Editor, Associate Editor – Oil Products
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Airlines could buy more Corsia credits, then SAF: Panel
Airlines could buy more Corsia credits, then SAF: Panel
Singapore, 3 July (Argus) — Airlines could buy more carbon credits to meet their near-term decarbonisation targets and increase their sustainable aviation fuel (SAF) purchases in later years when prices fall, said panelists at the MyAero Sustainable Aviation APAC Symposium in Putrajaya, Malaysia, over 30 June-2 July. "As sustainable aviation fuel (SAF) is so much more expensive today, we probably need a greater share of credits to address aviation emissions' impact, and a smaller share of SAF to lay the foundations for greater use in future," said Puar Si Liang, vice-president of Singapore-based investment platform GenZero. "But when we get to 2050, a huge chunk of aviation decarbonisation should be addressed by SAF, and carbon credits used for the residual emissions," he added. Some volume of carbon credits is still needed to address residual emissions even under International Civil Association Organization's (ICAO) most aggressive long-term aspirational goal (LTAG) Fuel Scenario 3 for aviation emissions reduction, given that SAF and low-carbon aviation fuels will not be able to reduce all of it, Puar said. Buyers are often purchasing carbon credits instead of SAF because they can fulfil obligations and are a fraction of what SAF costs, founder and managing director of commercial advisory firm Stratx, Izabela Santos, said. Stratx is involved in live SAF offtake negotiations, and works with project developers, investors, airlines and other stakeholders to help SAF projects reach final investment decisions (FID). Argus assessed the spot price for the ICAO's Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) Phase 1 credits at $9.30/t CO2e on 2 July, the lowest levels since the assessment's launch last November — although demand is also likely dampened as end-users await more clarity from the EU's emissions trading system (ETS) review planned for mid-July, where the ETS' scope may be extended to international aviation emissions from departing flights. In comparison, the RED HEFA-SPK-jet/kerosene CO2 abatement Strait of Malacca price — which measures the cost of abating a tonne of CO2e greenhouse gas emissions by consuming SAF rather than jet fuel — stood at around $459/t CO2e on 2 July. Countries in the Association of Southeast Asian Nations (Asean) have a pipeline of 100 new projects, which could bring an additional 133mn-302mn Corsia-eligible emissions units into Corsia's second phase running from 2027-35, possibly worth $1.3bn-7bn, according to a report jointly published by aircraft manufacturer Boeing, GenZero, and carbon services firm Abatable, and also announced at the conference. Global demand for Corsia Eligible Emissions Units (EEUs) is estimated at 1.2bn-1.8bn during Corsia's second phase. Not all airlines Credits also align better with airlines' procurement cycles compared with long-term SAF offtake agreements, Santos said. Airlines need to show demand signals, but it is difficult for us to into SAF contracts with fuel suppliers for more than around a year due to price uncertainty, said Japan Airlines' vice-president for promotion of Japan-made SAF Atsushi Kita. "It's also very tricky for us to strategise and decide on the duration of SAF offtakes, due to unstable feedstock prices and recently volatile SAF prices," said Malaysia Airlines' (MAG) head of sustainability Rahimah Ali. "It's a step for airlines — even the strongest of them — to change the well-trodden process of buying fuel 12-24 months out, and to think in the timeframe of a SAF facility, which usually require 15-20 years of guaranteed procurement. That's many years of procurement commitment that sits on your balance sheet as a risk," said chief of ICAO's Finvest hub Robert Boyd. Finvest aims to accelerate the financing of cleaner energy solutions for aviation by connecting various stakeholders, with a focus on SAF. European airlines like KLM and IAG have signed long-term offtake agreements, but this is not seen across the industry yet, Boyd said. Banks will require from SAF project developers a binding level of legal commitment towards SAF purchases, which is hard to achieve, he said, adding that a letter of intent or memorandum of understanding will not be enough. "And colloquially speaking, even if fuel suppliers buy SAF from producers, they will typically just pass on those costs to the airline. Fuel suppliers similarly do not want to lock themselves into 10-15-year agreements especially when the SAF price is expected to fall," Santos said. Competing for now, complementary in future? Carbon credits and SAF compete, Santos said. Not in every case, but to a significant enough degree to impact a SAF project's FID pipeline, she added. "Airlines and fuel suppliers' budgets are finite. If airlines can fulfil decarbonisation obligations at a significantly cheaper price, credits will win every single time — unless there's an external factor changing this calculus. The ability to use credits takes pressure off them to sign offtake agreements, without which no projects will be built — except in China, where it's a different ballgame," Santos said. Of roughly 600 SAF projects announced since 2016, only around 35 are currently operational, Boyd said. Corsia is a compliance cost for airlines, but SAF is still an important decarbonisation lever for them, with more jurisdictions imposing targets, Malaysia Airlines' Rahimah Ali said. Carbon credits and SAF are complementary strategies, with credits enabling airlines to reduce emissions as much as possible within the value chain and SAF for further reductions, GenZero's Puar said. Corsia's phases have an end-date of 2035 but the aviation industry's net-zero emissions goals are by 2050, so the strategy of reaching that should include SAF, which will be better understood by then, ICAO's Boyd said. "If there is the commitment for decarbonisation to be in-sector — meaning areas that airlines can control — SAF will play the leading role in that out to 2050, and perhaps beyond," he added. "And even if we achieve our net-zero by 2050 goals, we still need energy sources to maintain that [status]. Right out, I can see that both Corsia credits and SAF will play a role [in decarbonisation] out till 2100," Boyd said. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Republicans urge Trump to restore Jones Act
Republicans urge Trump to restore Jones Act
New York, 1 July (Argus) — Republican US House members, including speaker Mike Johnson (R-Louisiana), are urging President Donald Trump to not renew a waiver on domestic shipping requirements issued following the outbreak of the US-Iran war, according to a letter seen by Argus . "We write to respectfully request that the current Jones Act waiver be allowed to expire as scheduled on 16 August 2026 and encourage you to utilize alternative policy tools to address fuel and fertilizer costs while preserving the strength of the American maritime industry," 52 House Republicans said in the 30 June letter. The Merchant Marine Act of 1920, also known as the Jones Act, stipulates that shipments between US ports must be carried on vessels that are US-built, US-flagged and US-crewed. The current Jones Act waiver was first issued on 17 March on the basis of national security and was later extended by 90 days. It is unclear whether the Trump administration will decide to extend the waiver. "Foreign-flagged vessels have operated under the waiver even in circumstances where US-flagged vessels were available, creating an understandable concern about the effect on American jobs, manufacturing and investment," the Republican lawmakers said in the letter. "The Jones Act waiver has become a loophole exploited by adversarial countries to erode America's maritime dominance." The national security pretense of the waiver, and its potential negative effect on the US domestic shipping community at a time where the administration has made revitalizing shipbuilding a priority, has come under increased scrutiny from domestic maritime stakeholders. By Charlotte Bawol Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Trump seeks to rewrite USMCA terms by 2036
Trump seeks to rewrite USMCA terms by 2036
Washington, 1 July (Argus) — President Donald Trump's administration will attempt to substantially revise terms of the US-Mexico-Canada (USMCA) trade agreement in the next decade, triggering a protracted negotiation period that could end with the treaty expiring in 2036. The USMCA, negotiated during Trump's first term in 2018-20, set 1 July 2026 as a deadline for the three countries to agree on an extension, or to seek to revise its terms. The Trump administration has decided not to renew the deal in its current form, said Jamieson Greer, who heads the US trade representative's office (USTR), on Wednesday. That decision does not immediately terminate the USMCA. The three countries will now hold annual reviews to seek consensus on a long-term extension beyond 2036, but any country can withdraw from the pact with six months' notice. Greer's counterparts, Mexico's economy minister Marcelo Ebrard and Canada's trade minister Dominic LeBlanc, issued statements on Wednesday stressing that the agreement remains fully in force despite the US decision. Public comments submitted to the USTR and US congressional hearings earlier this year showed broad support from energy, agriculture and other sectors for renewing the trade deal without changes. But Trump has made it clear he was opposed to the renewal. "I'm not a big fan of" USMCA, he said last month. "We do better without an agreement." The USTR has cited rising US trade deficits with Mexico and Canadian countermeasures during last year's trade war the White House launched with its neighbors as reasons for the decision not to automatically renew the USMCA. Greer told US lawmakers previsously USTR will push to shore up US content requirements in products covered by the USMCA, especially in auto manufacturing. The agency will maintain its policy of exempting North American trade in energy, fertilizers and minerals from future tariffs. USTR officials also told lawmakers that the US administration may seeks separate agreements with Mexico and Canada instead of a three-way deal. Ottawa and Mexico City have shown little support for that approach. The USMCA provided a buffer against tariffs that Trump's administration leveled on Canadian and Mexican imports last year and is trying to recreate after the US Supreme Court in February struck down his ability to impose tariffs at will. Canada and Mexico still face higher steel and aluminum tariffs than before Trump returned to office, but the USMCA has exempted most trade between the three countries from tariffs. Trump's decision not to automatically renew the deal will weigh on investment and business decisions in the next decade, private sector executives have said. "Once we get past 1 July, the forecasts change and economic conditions will gradually worsen every month no resolution is reached," said Victor Herrera , chief economist at Mexico's finance executives' association IMEF. "Investment will not pick up until that renewal is final." The USTR will hold another round of trade talks with Mexico on 20 July to discuss possible changes, Greer said. Canada will focus USMCA review discussions with the US "on addressing sectoral tariffs on Canadian steel, aluminum, autos and lumber," LeBlanc said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
US soybean crush margins slip below $3/bu
US soybean crush margins slip below $3/bu
St Louis, 1 July (Argus) — Soybean crushing margins on the Chicago Board of Trade (CBOT) slipped below $3/bushel (bu) on Tuesday for the first time in nearly three months, falling by 31pc from a record high in early June. Across July-delivered CBOT soybean, soybean meal, and soybean oil contracts crushing margins fell to $2.88/bu as of 30 June, the lowest for front month margins on CBOT since 9 April and down from a record $4.18/bu on 3 June. Margins have come under pressure from lower soybean meal values, which have fallen by 5pc since 3 June to settle to $304.70/short ton (st) as of 30 June. But most of the downward pressure has come from falling soybean oil values, which have fallen by 16pc to $0.67/lb from a 1 June peak of $0.79/lb. Soybean futures have fallen as well, down by 3.2pc from the 3 June crushing margins peak to $11.17/bu as of Tuesday's settlement. But the weight of falling soybean oil values was more than enough to pull crushing margins lower. Short-term struggle Soybean crushing margins have fallen in recent weeks as soybean oil prices followed crude oil lower , while imports of other feedstocks have added supply pressure. The US and Iran have continued to work towards resolving their conflict and restoring global crude oil flows — despite some setbacks — with global crude oil prices trending lower as a result. Rebounding imports of tallow and used cooking oil since the start of 2026 have also weighed on demand for domestic feedstocks. Favorable import economics kept the feedstock arbitrage widely open through the first half of the year, prompting renewable diesel producers, particularly in coastal markets, to secure large volumes of waste-based feedstocks. Domestic feedstock prices initially continued to rise, as imported cargoes typically take several months to reach US ports. Those volumes are now beginning to arrive, increasing feedstock availability and creating congestion in some key demand centers, while storage tanks are filling. The outlook for imports during the remainder of the year may hinge on trade policy. President Donald Trump is expected to finalize new tariff measures in late July, when the temporary 10pc global tariff framework expires, a decision that could significantly influence feedstock import flows for the balance of 2026. A comeback in the making? While soybean crush margins face several near-term headwinds, how much lower they can fall remains a question. US demand for soybean oil is still expected to grow throughout this year as biofuel producers work to fulfill expanded US renewable fuel blending obligations and capitalize on a recently adjusted 45Z biofuel producers tax credit that heavily favors the use of domestic biofuel feedstocks. US soybean oil consumption for biofuel production reached a record 1.28bn lbs in March, up 54pc from a year earlier, underscoring strong demand from the sector. The US has set biomass-based diesel mandates for 2026 at 5.53bn USG, including volumes reallocated from small refinery exemptions, raising the overall requirement by 65pc from 2025 levels. Domestic renewable diesel plants are operating at near-maximum capacity to meet the higher mandates, as reflected in stronger generation of biomass-based diesel (D4) Renewable Identification Numbers (RINs) in May, according to the US Environmental Protection Agency. D4 RIN generation totaled 736mn credits in May, up 22pc from the same month a year earlier. Soybean prices could also struggle in the months ahead. The US Department of Agriculture this week revised up its US soybean planted area estimate for 2026, and the outlook for this year's soybean yields remains positive . Export demand for the 2026-27 marketing year has started to build , but with a limited outlook following the US and China trade agreement in October of last year it is not clear that foreign demand will add sufficient support to push crushing margins lower should increased soybean oil demand begin to lift crushing margins again. If soybean crushing margins come under additional pressure, they would still have ample room to move lower before it would curtail the record crushing rates seen in the US during recent months. From 2021 through 2025 US soybean crush margins averaged $1.51/bu, leaving plenty of room for lower returns to drive crushing volumes. By Ryan Koory and Jamuna Gautam Chicago Board of Trade soybean crush margins $/bu Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.