US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, greatest considering that July – AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest since June 2023
Better credit rates, stronger diesel need stimulated greater activity – expert
NEW YORK CITY, Jan 3 (Reuters) – U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their total operable capability in October, the greatest because July 2024, the data showed. Biodiesel plant usage rose to 89%, the greatest considering that June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers reliant on federal government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for providers, as it gains much better incentives and can substitute diesel completely.
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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as most new biofuel plants opened in the past 3 years were geared towards it.
Still, oversupply pressed sustainable 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 mainly by a rise in the value of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, rose 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 also helped by for diesel, which hit a 1 year high in October, raising costs for both the conventional fuel and its options, 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 best instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)