US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, highest considering that July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, highest because June 2023
Better credit costs, more powerful diesel demand spurred greater activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their total operable capacity in October, the highest considering that July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest given that June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers dependent on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for providers, as it gains better incentives and can substitute diesel completely.
Total biodiesel production capacity 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% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most brand-new biofuel plants opened in the previous three years were geared towards it.
Still, oversupply pressed eco-friendly diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the market in October was enhanced generally by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and renewable diesel production, 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 helped by stronger need for diesel, which struck an one-year high in October, raising rates for both the conventional fuel and its alternatives, he said.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from 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)