US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel producers utilization at 77%, highest considering that July – AEGIS

Biodiesel producers usage rate struck 89% in Oct, highest given that June 2023

Better credit costs, stronger diesel need stimulated higher activity – analyst

NEW YORK, 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 overall operable capacity in October, the greatest considering that July 2024, the information showed. Biodiesel plant utilization increased to 89%, the greatest given that June 2023.

Rising usage rates and improving margins are a welcome relief for the industry, after operators endured a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers reliant on government incentives such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for suppliers, as it gains much better incentives and can substitute diesel completely.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched 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 showed, as a lot of brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pushed eco-friendly diesel output capacity 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 boosted mainly by a rise in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly 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 also assisted by more powerful need for diesel, which hit an one-year high in October, raising rates for both the conventional fuel and its options, he said.

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 whatever rowing in the ideal direction in October, » Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)