US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, highest given that July - AEGIS
Biodiesel producers utilization rate struck 89% in Oct, greatest because June 2023
Better credit rates, stronger diesel demand stimulated higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the highest considering 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 demand development slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers dependent on government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for providers, as it reaps better rewards and can replace 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 almost 19% to 4.58 billion gallons in October, the EIA information revealed, as a lot of new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pushed sustainable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the market in October was improved generally 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, provided 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 also assisted by more powerful demand for diesel, which hit an one-year high in October, raising costs for both the standard fuel and its options, he said.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had whatever rowing in the right direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)