US Biofuel Producers Increase in Oct As Profitability Improved,

Renewable diesel producers usage at 77%, greatest considering that July – AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, highest given that June 2023

Better credit costs, more powerful diesel need stimulated higher activity – expert

NEW YORK, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.

Renewable diesel producers made use of 77% of their total operable capability in October, the highest considering that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest considering that June 2023.

Rising utilization rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need growth slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has become the favored fuel for providers, as it reaps 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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, 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 enhanced generally 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, provided for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were also assisted by more powerful demand for diesel, which hit an one-year high in October, raising prices for both the traditional fuel and its alternatives, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You really had everything rowing in the right instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)