US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, highest given that July - AEGIS
Biodiesel manufacturers usage rate struck 89% in Oct, greatest considering that June 2023
Better credit costs, stronger diesel demand stimulated greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as demand growth slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for suppliers, as it reaps better rewards and can replace diesel totally.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to data launched by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pushed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the industry in October was improved primarily by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.
Margins were likewise helped by more powerful need for diesel, which struck an one-year high in October, raising prices for both the standard fuel and its alternatives, he said.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had everything rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)