US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, highest given that July - AEGIS
Biodiesel manufacturers usage rate struck 89% in Oct, highest because June 2023
Better credit prices, stronger diesel higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the greatest since July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the greatest since 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 demand growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more pricey to produce than diesel, making providers dependent on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has actually become the preferred fuel for suppliers, as it reaps better incentives and can replace diesel completely.
Total biodiesel production capability 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 capacity rose almost 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 sustainable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was boosted primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and renewable 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 also assisted by more powerful need for diesel, which hit an one-year high in October, raising prices for both the standard 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., likewise 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 ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)