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Biofuels demand peaks; traders reinforce teams to take piece of the market

Shell Canada biofuels plant

Biofuels demand in the U.S. is peaking, and commodity merchants and traders are reinforcing their teams to take a piece of the market, according to a Reuters report released this Friday. Investments firms such as Citadel, Gunvor and Trafigura are reinforcing biofuels specialized teams.

Firstly, many of these firms have already presence in Europe; however, in the United States, where the production of advanced biofuels that act as petroleum fuel substitute demand is peaking; has driven hiring maneuvers by companies, according to sources quoted by Reuters.

Secondly, according to government data, in recent months, renewable fuels or biofuels account for 12% of U.S. energy consumption. They are having a continued growth in the market every year as well.

Consequently, hedge fund Citadel made its first entry in the U.S. renewable fuels trading space in April. The firm hired Jay McCall as head of North America Environmental Products Trading; based in San Francisco. McCall previously was director of environmental commodities trading at DTE Energy Trading.

Likewise, that same month, trader Gunvor hired Shane Foster to its renewable energy division; based in New York, according to Reuters and a review form his LinkedIn page. Also, Trafigura is looking to hire traders specializing in renewable natural gas; biofuels like renewable diesel and feedstocks.

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Biofuels like renewable diesel eating up the refining of fuels

Thirdly, another factor rising demand is refiners looking for ways to offset their carbon emissions; and to take advantage of public policies that incentive biofuels, like the Low Carbon Fuel Standard in California; and the federal and infamous Renewable Fuel Standard.

Moreover, as we have reported previously, in this regard it has been renewable diesel the one biofuel that has caught the attention of refiners. Specially with major refiners like Valero reporting a record operating income of $203 million in the first quarter of 2021; related to its renewable diesel segment.

Consequently, many other refiners in the U.S. announced plans to produce more fuels from animal fats and soybean oils at their facilities. Due to all these factors, traders a looking for a piece of the market.

Finally, Gunvor has indeed set up a new subsidiary to invest in non-hydrocarbon projects; particularly in biofuels, biomass; also, renewable power and hydrogen.

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