The Chinese customs have now adjusted various export rebates resulting in UCO rebates moving from 13% to 0%. This makes it more expensive for collectors/exporters now. Soyoil reacted mostly on wishful thinking, not realizing that the carbon intensity advantage of UCO is actually at least 250% better than Soyoil and that the 13% adjustment will not have much impact on the use of UCO in the United States under the 45z rule. Although, it should be noted that we are still not clear what model to use, so we go by the standard LCA model. I used a CI of 40 for Soyoil and 15 for UCO to exemplify the differential, but it should be noted that the average CI of Soyoil in the US is closer to 50. I think this move will have more impact on European producers buying UCO from China as their gross margins are thinner than US margins. Gross margin in Europe today for UCOME is approximately $318/mt, while in the US, the gross margin including LCFS is more like $416/mt. Have a great weekend!
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