Renewable diesel producers usage at 77%, highest since July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, greatest considering that June 2023
Better credit prices, more powerful diesel demand spurred greater activity - expert
NEW YORK, 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 manufacturers used 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as need development 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 providers dependent on federal government incentives such as tax credits. Among the 2, renewable diesel has become the preferred fuel for suppliers, as it reaps much better rewards and can entirely.
Total biodiesel production capability 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the past three years were tailored towards it.
Still, oversupply pushed sustainable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was improved mainly by a rise in the worth of credits required 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, improving success for making the fuels, Capozzola said.
Margins were also helped by stronger need 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 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 actually had everything rowing in the right direction in October," Capozzola said. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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