US Biofuel Producers Ramped Up In Oct As Profitability Improved
Renewable diesel producers utilization at 77%, highest because July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, highest since June 2023
Better credit prices, more powerful diesel demand stimulated greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers 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 producers made use of 77% of their total operable capability in October, the highest since July 2024, the information showed. Biodiesel plant utilization increased to 89%, the greatest considering that June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making providers reliant on federal government rewards such as tax credits. Among the 2, sustainable diesel has become the favored fuel for providers, as it gains much better rewards and can substitute diesel totally.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many brand-new biofuel plants opened in the past 3 years were tailored towards it.
Still, oversupply pushed 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 industry in October was increased generally by a rise in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly 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 profitability for making the fuels, Capozzola said.
Margins were also assisted by stronger demand for diesel, which hit an one-year high in October, raising costs for both the traditional 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 best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)