US Biofuel Producers Ramped Up In Oct As Profitability Improved

Renewable diesel producers utilization at 77%, greatest since July - AEGIS


Biodiesel producers utilization rate hit 89% in Oct, greatest considering that June 2023


Better credit prices, stronger diesel demand spurred greater activity - expert


NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful 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 greatest because July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the highest because June 2023.


Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as need growth slowed, the market oversupplied and requiring a number of biodiesel plant closures.


Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for providers, as it gains better rewards 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 launched by the U.S. Energy Information Administration on Tuesday.


Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as the majority of brand-new biofuel plants opened in the past three years were tailored towards it.


Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.


In addition to plant closures, success for the market in October was boosted primarily by a surge in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.


D4 Renewable Identification Numbers, provided for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola stated.


Margins were likewise assisted by more powerful need for diesel, which hit a 1 year high in October, raising rates for both the traditional 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.


"You actually had everything rowing in the ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)