US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel manufacturers usage at 77%, greatest because July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, greatest because June 2023
Better credit rates, more powerful diesel need spurred greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel producers used 77% of their total operable capacity in October, the highest given that July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest given that 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 need development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers dependent on federal government incentives such as tax credits. Among the 2, eco-friendly diesel has actually as the preferred fuel for providers, as it enjoys better incentives and can replace diesel completely.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information released 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 information revealed, as many new biofuel plants opened in the previous 3 years were tailored 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, profitability for the industry in October was improved mainly by a surge in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable 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, enhancing success for making the fuels, Capozzola stated.
Margins were also assisted by stronger demand for diesel, which struck an one-year high in October, raising costs 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 rose 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 ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)