US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest given that July - AEGIS
Biodiesel producers utilization rate struck 89% in Oct, greatest since June 2023
Better credit rates, stronger diesel need stimulated greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest because July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the highest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.
Both eco-friendly 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 suppliers, as it gains 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% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many 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 improved mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable 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 success for making the fuels, Capozzola said.
Margins were likewise assisted by stronger demand for diesel, which struck an one-year high in October, raising prices for both the traditional fuel and its options, he stated.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are 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 ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)