Renewable diesel producers usage at 77%, highest since July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, highest given that June 2023
Better credit rates, stronger diesel demand spurred greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the greatest because July 2024, the data showed. Biodiesel plant utilization increased to 89%, the greatest because 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 need growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for providers, as it gains much 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 capability rose almost 19% to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the previous 3 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, profitability for the market in October was enhanced primarily by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, rose 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 demand for diesel, which hit an one-year high in October, raising costs for both the standard 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 whatever rowing in the ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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