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