Renewable diesel producers usage at 77%, greatest since July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, highest considering that June 2023
Better credit prices, stronger diesel demand spurred higher activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their overall operable capacity in October, the greatest because July 2024, the information showed. plant utilization increased to 89%, the highest considering that June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, 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 sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers dependent on government incentives such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for suppliers, as it reaps much better incentives and can substitute diesel completely.
Total biodiesel production capacity 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 rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the previous three years were tailored towards it.
Still, oversupply pushed sustainable diesel output capability 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 generally by a rise in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and renewable diesel production, increased 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 more powerful demand for diesel, which hit an one-year high in October, raising rates for both the traditional 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., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had everything rowing in the right direction in October," Capozzola said. (Reporting by Shariq Khan in New York
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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