US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, highest since July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, highest because June 2023
Better credit prices, stronger diesel need stimulated 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, helped by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the highest considering that July 2024, the information revealed. 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 industry, after operators endured a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it reaps much better rewards and can replace diesel totally.
Total 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 rose 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 past 3 years were tailored 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 improved mainly by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose 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 likewise assisted by more powerful demand for diesel, which hit an one-year high in October, raising rates 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 really had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)