US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, highest considering that July – AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest since June 2023
Better credit prices, more powerful diesel need stimulated higher activity – analyst
NEW YORK, 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 information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the highest since July 2024, the information showed. Biodiesel plant usage increased to 89%, the highest considering that June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it gains better incentives and can replace 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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as most brand-new biofuel plants opened in the past 3 years were geared towards it.
Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the market in October was boosted primarily 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 renewable diesel production, rose 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 assisted by stronger demand for diesel, which hit 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
“You really had whatever rowing in the best direction in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)
