US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest considering that July – AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, greatest given that June 2023
Better credit prices, more powerful diesel need stimulated higher activity – analyst
NEW YORK, Jan 3 (Reuters) – U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel producers used 77% of their overall operable capability in October, the greatest because July 2024, the information revealed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, renewable 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 information released by the U.S. Energy Information on Tuesday.
Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of brand-new biofuel plants opened in the previous three years were tailored towards it.
Still, oversupply pressed renewable diesel output capability 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 increased mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.
Margins were likewise helped by stronger need for diesel, which hit a 1 year high in October, raising prices for both the conventional 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 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 direction in October,” Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)