Renewable diesel manufacturers usage at 77%, highest considering that July - AEGIS
Biodiesel producers utilization rate struck 89% in Oct, highest since June 2023
Better credit costs, stronger diesel need stimulated higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel producers used 77% of their overall operable capability in October, the highest given that July 2024, the data revealed. Biodiesel plant usage rose to 89%, the greatest given that June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and forcing a variety of biodiesel plant closures.
Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for providers, as it gains better incentives and can replace diesel totally.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to 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 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, profitability for the industry in October was increased primarily by a surge in the value of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose 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 helped by more powerful need for diesel, which hit a 1 year high in October, raising prices for both the standard fuel and its options, he said.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had everything rowing in the right instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Increase in Oct As Profitability Improved,
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