US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, highest because July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, highest because June 2023
Better credit rates, stronger diesel need stimulated higher expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their total operable capability in October, the highest considering that July 2024, the information showed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as demand growth slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has become the favored fuel for providers, as it reaps better rewards and can replace diesel completely.
Total biodiesel production capability 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 data revealed, as the majority of brand-new biofuel plants opened in the previous 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, success for the industry in October was enhanced primarily by a rise in the worth of credits needed 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, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola stated.
Margins were likewise assisted by stronger demand for diesel, which struck an one-year high in October, raising prices 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., likewise rose 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 instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)