US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers usage at 77%, greatest because July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest given that June 2023
Better credit costs, stronger diesel demand spurred greater activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. and biodiesel manufacturers 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 manufacturers used 77% of their overall operable capability in October, the highest considering that July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising usage 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 renewable diesel and biodiesel are more pricey to produce than diesel, making providers reliant on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for providers, as it gains much better incentives and can replace diesel totally.
Total biodiesel production capacity 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of new biofuel plants opened in the previous 3 years were geared towards it.
Still, oversupply pressed renewable diesel output capability 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 improved primarily by a rise in the value of credits needed 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, 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 helped by stronger demand for diesel, which struck a 1 year high in October, raising prices for both the traditional fuel and its alternatives, he stated.
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 truly had whatever rowing in the best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)