Renewable diesel manufacturers usage at 77%, highest considering that July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest given that June 2023
Better credit rates, stronger diesel need spurred higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the highest since July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest considering that June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for providers, as it reaps much better incentives and can replace 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 information revealed, as most new biofuel plants opened in the previous three years were tailored towards it.
Still, oversupply pushed renewable diesel output capability 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 boosted mainly by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola stated.
Margins were likewise helped by more powerful demand for diesel, which struck a 1 year high in October, raising prices for both the conventional 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 really had whatever rowing in the ideal instructions 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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