US Biofuel Producers Increase In Oct As Profitability Improved

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


Biodiesel producers usage rate struck 89% in Oct, greatest since June 2023


Better credit costs, stronger diesel demand spurred higher activity - analyst


NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.


Renewable diesel producers utilized 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest given that June 2023.


Rising usage rates and improving margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as demand development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.


Both renewable 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 actually become the preferred fuel for suppliers, as it enjoys better rewards and can replace diesel completely.


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 capacity rose nearly 19% year-over-year to 4.58 billion in October, the EIA information showed, as a lot of brand-new biofuel plants opened in the past 3 years were geared 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 boosted generally by a surge 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 eco-friendly diesel production, rose 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 stronger need for diesel, which struck a 1 year high in October, raising rates 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 consumed in the U.S., likewise increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.


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