Renewable diesel producers utilization at 77%, highest considering that July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, greatest considering that June 2023
Better credit rates, stronger diesel need stimulated greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers 77% of their total operable capacity in October, the highest considering that July 2024, the information revealed. Biodiesel plant usage increased to 89%, the greatest 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 forcing a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for suppliers, as it enjoys better incentives and can substitute diesel entirely.
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 capacity increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pushed 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 mainly by a rise in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola said.
Margins were likewise assisted by more powerful demand for diesel, which hit an one-year high in October, raising costs for both the conventional 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 increased 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 ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City
1
US Biofuel Producers Increase in Oct As Profitability Improved,
Meri Creech edited this page 3 weeks ago