US Biofuel Producers Ramped up in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, greatest given that July – AEGIS
Biodiesel producers utilization rate hit 89% in Oct, greatest given that June 2023
Better credit costs, stronger diesel need spurred higher expert
NEW YORK CITY, Jan 3 (Reuters) – U.S. eco-friendly diesel 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 producers used 77% of their total operable capability in October, the greatest because July 2024, the data revealed. Biodiesel plant usage rose to 89%, the highest given that June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for suppliers, as it enjoys much better incentives and can substitute diesel entirely.
Total biodiesel production capability 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as many brand-new biofuel plants opened in the previous 3 years were tailored towards it.
Still, oversupply pushed eco-friendly 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 increased mainly by a surge in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and eco-friendly 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 also helped by stronger need for diesel, which struck a 1 year high in October, raising rates for both the conventional 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 rose 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; Editing by David Gregorio)
