Contacts for SOLFUELS USA LLC

Commercial office: 1661 International Drive, Suite 408   Memphis, TN

Accounts & Personnel matters: Rashad.Simelton@Solfuels.com

Logistics: Victoria.Benson@Solfuels.com

Plant site: 1463 Highway 20 South  Helena, AR 72342

Plant manager: Steve.Lewis@solfuels.com

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Gasoil down $3.25/MT in Asia after settling down $12/mt ovnite in London at $484/MT with Mar/Jul contango widening significantly to 9.50/mt while Mar/Jun closed at $7.50/mt as vessels keep looking for home. BOGO rose another $6/mt @ +$266/mt which is $46/mt in 3 trading session. FAME premium for Mar showing +420 on paper while RME offered at +457 which equates to +437 FAME. US Biodiesel RINs were lower at 83cpg as tax credit now getting discounted into RINs prices. 3:2:1 crack rises moderates to $15.46 as product prices see a sell off not matched by crude. Euro weaker at 1.0513. US Dollars index rips higher to 102.07 . JPY much weaker at 114.18. CNY weaker at 6.898 while CNH (offshore) prints also weaker at 6.89 which is first time in a while that offshore rate is stronger than domestic CNY.

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Gasoil down $3.25/MT in Asia but still remains relatively flat @ 496 with Mar/Jul contango settling at a bit narrower 7.75/mt while Mar/Jun closed at $6/mt as EIA shows a build in crude yet a decline in distillates – despite this inventories of all crude/products remains at a 10 year high! BOGO rose again $15/mt @ +$260/mt which is $40/mt in 2 trading session. FAME premium for Feb showing unchanged +442 but that is mostly on account of liquidity issues as it should be over +450. US Biodiesel RINs recovered to 85.5cpg as market trying to figure out how to price unexecuted EPA and Congressional action. 3:2:1 crack rises dramatically to $15.74 as crude drops but product remains over-priced. Euro weaker at 1.0542. US Dollars index on a tear today 101.83. JPY weaker at 113.52. CNY weaker at 6.882 while CNH (offshore) prints also weaker at 6.876 as China and PBOC trying to decipher US intentions on trade.

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News of the week: Thoughts on overnight WH Biofuels news

Nothing fixed yet except a White House boardroom deal has been done which generally speaking could take US domestic refiners out of RINs picture – they will just produce gasoline or diesel.

Blenders now will have no one to sell the RINs to since they will be new obligated party so they will have to pass RINs costs directly to consumers which they were mostly doing anyway in order to make some extra bucks.  So refiners get rid of some costs and pass it along to blenders who will have to offset it by buying gasoline at lower price from refiners…. this appears to be a zero sum game and perhaps refiners might end up losing even more than what they are saving?
I think this new mandate scheme does not change things that much except market for traded RINs could diminish dramatically with a lot less speculation.
Apparently as part of same closed door deal, EPA will allow for nationwide E15 meaning extra blending which suits everyone since Ethanol is only one of few oxygenates available in USA since MTBE is banned. Higher RON is good for your engine.
Also, as part of deal White House agreed to support pushing for Producer Tax credit for Biodiesel in budget that needs to be done before Mar15.  Senator Grassley and the new Ambassador to China (ex-Governor of Iowa) who have an open line to Trump have done some good work.  Mar 15 is an important date in your calendar as this is the date when US must pass a budget and raise the national debt ceiling.  This 2016/17 budget will most probably pass with a tax extender package as this is the only way to pass all the tax breaks and benefits necessary for every American to file their taxes on April 15.  Without this tax extender package, Americans will get the greatest tax increase in a decade and GOP will be toast.   I doubt that there will be a repeal of Obama care at this stage unless there is such a massive tax cut included to enhance the appeal which is unlikely considering the little time to debate it before Mar15.
Anyway, it looks like Trump today promised so much for the new budget year starting Oct 1, 2017, that GOP better start working on it soon!
Also, one thing for sure, the idea that Trump was bad for Biofuels is now out of the window, so it will be difficult to stay short bean/rape/palm oil with close to 34 Million MT of Biodiesel to be produced globally in 2017.  The only question remaining must be how the relationship of these oils will be maintained because of protectionism bias as clearly BOPO at $100/MT is probably too narrow!

Gasoil up $6.5 in Asia but remains relatively flat @ 495.75 with Mar/Jul contango settling at a much wider $8.25/mt while Mar/Jun widened $6.25/mt. BOGO rose $25/mt @ +$244/mt. FAME premium for Feb showing +442 but after last night announcement of a White House deal on Biofuels, we can see that flat price traded $30/mt higher. US Biodiesel RINs dropped to 80cpg as market expects an imminent announcement of a producer tax credit. 3:2:1 crack drops further to $10.91 as product glut in both US, EU and Asia now. Euro unchanged at 1.0582. US Dollars index flat today 101.44. JPY weaker at 112.88. CNY a bit weaker at 6.873 while CNH (offshore) prints also weaker at 6.858.

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Gasoil down slightly this morning in Asia but gasoil values remain relatively flat @ 497 with Mar/Jul contango settled at a narrower $6.75/mt while Mar/Jun is only slightly narrower $5.25/mt. BOGO down $10/mt @ +$220/mt. FAME premium for Feb showing +445 with still very little liquidity but increasing interest for FAME as we are approaching spring in EU . US Biodiesel RINs remain unchanged at 89.75cpg. 3:2:1 crack recovers a bit to $11.65 but product glut remains in both US, EU and Asia now. Euro weaker at 1.0585. US Dollars index flat today 101.14. JPY stronger at 112.61. CNY a bit stronger at 6.869 while CNH (offshore) prints much stronger at 6.855.

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Gasoil up 6.25/MT this morning in Asia but gasoil values remain flat @ 495.75 with Mar/Jul contango settled at a wider $7.50/mt while Mar/Jun is $5.75/mt. BOGO up $5/mt @ +$230/mt. FAME premium for Feb showing +443 with still little liquidity although RME/FAME showing narrower spread of $8-10 in June . US Biodiesel RINs have moved up to 89.75cpg. 3:2:1 crack recovers a bit to $11.57 as product glut remains in both US and Europe. Euro weaker at 1.0551. US Dollars index flat today 101.33. JPY unchanged at 113.18. CNY unchanged at 6.877 while CNH (offshore) prints weaker 6.863.

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Gasoil down $4/MT in Asia @ 497.75 with Mar/Jul contango narrower at 6.75/mt. BOGO down another $7/mt @ +$225/mt on Bean oil weakness from South America. FAME premium for Feb showing +445 with still little liquidity although RME/FAME showing narrower spread of $12 and even $10 in June . US Biodiesel RINs have moved up to 89.25cpg as EPA administrator reassures the markets. 3:2:1 crack drops $1 to $11.05 as product starting to appear in both US and Europe. Euro weaker at 1.055. US Dollars index strong today 101.31. JPY unchanged at 113.45. CNY weaker at 6.877 while CNH (offshore) prints weaker 6.857.

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