US Biofuel Producers Ramped Up In Oct As Profitability Improved
Renewable diesel producers usage at 77%, greatest since July - AEGIS
Biodiesel manufacturers usage rate struck 89% in Oct, greatest given that June 2023
Better credit prices, stronger diesel need spurred higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up 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 producers utilized 77% of their overall operable capability in October, the highest since July 2024, the data revealed. Biodiesel plant usage rose to 89%, the greatest since June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and forcing a variety of biodiesel plant closures.
Both sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for providers, as it gains better rewards and can replace diesel totally.
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 increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as the majority of new biofuel plants opened in the previous 3 years were geared towards it.
Still, oversupply pressed 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 industry in October was boosted mainly 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, released for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola said.
Margins were also assisted by stronger need for diesel, which struck an one-year high in October, raising rates for both the standard 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 from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had everything rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)