US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel manufacturers usage at 77%, greatest since July - AEGIS
usage rate struck 89% in Oct, greatest because June 2023
Better credit prices, stronger diesel need spurred greater activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capability in October, the highest given that July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest given that June 2023.
Rising utilization rates and improving 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 requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers based on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it gains better incentives and can substitute diesel entirely.
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 rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of new biofuel plants opened in the past three 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 boosted primarily by a rise in the worth 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 sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola said.
Margins were also helped by stronger need for diesel, which struck a 1 year high in October, raising prices 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., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had whatever rowing in the ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)