Renewable diesel producers utilization at 77%, highest because July - AEGIS
Biodiesel manufacturers utilization rate hit 89% in Oct, greatest considering that June 2023
Better credit costs, more powerful diesel need spurred greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their overall operable capacity in October, the greatest given that July 2024, the data revealed. Biodiesel plant usage increased to 89%, the highest because June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers depending on government rewards such as tax credits. Among the 2, renewable diesel has become the favored 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 launched by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as most brand-new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pressed sustainable diesel output capacity 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 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, issued for biodiesel and eco-friendly 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 likewise assisted by stronger demand for diesel, which struck 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 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 direction in October," Capozzola said. ( by Shariq Khan in New York City
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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