US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest given that July - AEGIS
Biodiesel manufacturers utilization rate hit 89% in Oct, greatest since June 2023
Better credit costs, stronger diesel demand spurred higher activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the greatest given that July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest considering that 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 marketplace oversupplied and requiring a number of biodiesel plant closures.
Both and biodiesel are more costly to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, eco-friendly diesel has actually become the preferred fuel for suppliers, as it gains better rewards and can replace diesel completely.
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 capacity increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pushed eco-friendly diesel output capacity 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 enhanced mainly by a rise 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, improving success for making the fuels, Capozzola said.
Margins were also helped by stronger need for diesel, which struck a 1 year high in October, raising prices for both the conventional 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 whatever rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)