US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel manufacturers utilization at 77%, greatest because July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest given that June 2023
Better credit prices, more powerful diesel demand spurred higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the highest considering that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest because June 2023.
Rising utilization rates and enhancing 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 requiring a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, renewable diesel has become the favored fuel for suppliers, as it gains much better rewards and can replace diesel entirely.
Total biodiesel production capacity 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.
output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the previous 3 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 boosted generally by a rise in the value of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly 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, enhancing profitability for making the fuels, Capozzola stated.
Margins were also helped by stronger demand for diesel, which struck an one-year high in October, raising costs 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 rose 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 best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)