US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, highest since July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest given that June 2023
Better credit costs, more powerful diesel demand stimulated higher activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their total operable capacity in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest because June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a variety 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, eco-friendly diesel has become the fuel for suppliers, as it reaps better incentives 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 released 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 showed, as most new biofuel plants opened in the past 3 years were geared towards it.
Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the industry in October was enhanced generally by a surge 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, released for biodiesel and renewable 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 stronger demand for diesel, which struck an one-year high in October, raising prices 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 rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)