US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest because July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, highest considering that June 2023
Better credit prices, stronger diesel demand spurred higher expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their overall operable capability in October, the greatest since July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest because June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it gains better incentives and can replace diesel entirely.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data released by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as the majority of brand-new biofuel plants opened in the previous 3 years were tailored towards it.
Still, oversupply pushed renewable diesel output capability 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 generally by a rise in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.
Margins were likewise assisted by stronger demand for diesel, which hit a 1 year high in October, raising costs for both the standard fuel and its options, he stated.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had whatever rowing in the best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)