US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel manufacturers usage at 77%, greatest considering that July - AEGIS
Biodiesel manufacturers utilization rate hit 89% in Oct, greatest given that June 2023
Better credit prices, more powerful diesel need spurred higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the highest because July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers reliant on federal government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for suppliers, as it reaps better rewards and can replace diesel totally.
Total biodiesel production capacity 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 increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most new biofuel plants opened in the past three 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, profitability for the market in October was increased mainly by a rise in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly diesel production, increased 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 assisted by more powerful demand for diesel, which struck a 1 year high in October, raising costs 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 in the U.S., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had whatever rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)