US Biofuel Producers Increase In Oct As Profitability Improved
Renewable diesel producers utilization at 77%, highest considering that July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest since June 2023
Better credit costs, more powerful diesel demand stimulated greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up 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 manufacturers utilized 77% of their overall operable capability in October, the highest because July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the greatest considering that June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it reaps better incentives and can replace diesel totally.
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 Administration on Tuesday.
Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion in October, the EIA information revealed, as many new biofuel plants opened in the previous 3 years were geared towards it.
Still, oversupply pushed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was improved primarily by a rise in the value 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, enhancing success for making the fuels, Capozzola stated.
Margins were also assisted by more powerful demand for diesel, which struck a 1 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., 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 ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)