US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest because July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, highest because June 2023
Better credit rates, stronger diesel demand stimulated higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their overall operable capacity in October, the highest considering that July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers reliant on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it reaps better incentives and can substitute diesel completely.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data released by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many brand-new biofuel plants opened in the previous three years were tailored towards it.
Still, oversupply pressed sustainable diesel output capability 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 mainly by a rise in the worth 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 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 said.
Margins were also assisted by stronger need for diesel, which struck an one-year high in October, raising prices 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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)