US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel manufacturers utilization at 77%, greatest given that July – AEGIS

Biodiesel producers usage rate hit 89% in Oct, greatest considering that June 2023

Better credit prices, stronger diesel demand stimulated higher activity – analyst

NEW YORK, Jan 3 (Reuters) – U.S. eco-friendly diesel and biodiesel producers 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 made use of 77% of their overall operable capacity in October, the highest considering that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest since June 2023.

Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the favored fuel for suppliers, as it enjoys much better rewards and can replace diesel entirely.

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 revealed, as many brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed renewable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, for the market in October was improved primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.

Margins were likewise helped by stronger need for diesel, which struck an one-year high in October, raising costs 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You actually had whatever rowing in the best instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)