US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel manufacturers usage at 77%, greatest given that July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, greatest since June 2023
Better credit prices, more powerful diesel demand spurred higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their overall operable capacity in October, the greatest since July 2024, the information revealed. Biodiesel plant usage rose to 89%, the highest given 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 variety of biodiesel plant closures.
Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it enjoys much better incentives and can substitute diesel totally.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of new biofuel plants opened in the previous 3 years were geared 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, profitability for the market in October was improved generally by a surge in the worth of credits required 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 eco-friendly 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 likewise assisted by more powerful demand for diesel, which hit an one-year high in October, raising prices 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had whatever rowing in the right direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; by David Gregorio)