US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, highest given that July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, greatest since June 2023
Better credit rates, stronger diesel need spurred greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the greatest given that July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.
Both renewable diesel and are more expensive to produce than diesel, making suppliers reliant on government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the preferred fuel for suppliers, as it gains better incentives and can substitute diesel entirely.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the past three 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 mandates, stated 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 success for making the fuels, Capozzola stated.
Margins were likewise helped by stronger demand for diesel, which struck a 1 year high in October, raising costs for both the traditional fuel and its alternatives, he stated.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had everything rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)