Renewable diesel producers usage at 77%, greatest given that July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest because June 2023
Better credit costs, more powerful diesel demand stimulated higher activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their overall operable capacity in October, the greatest because July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.
Both sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, eco-friendly diesel has actually become the favored fuel for providers, as it enjoys better rewards and can substitute diesel entirely.
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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of brand-new biofuel plants opened in the past 3 years were geared towards it.
Still, oversupply pressed renewable 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 enhanced primarily by a surge in the value of credits required for compliance with federal biofuel mandates, said 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 hit an one-year high in October, raising costs for both the standard fuel and its alternatives, he said.
Prices for credits under the Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had whatever rowing in the best direction in October," Capozzola stated. (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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