US Biofuel Producers Increase in Oct As Profitability Improved,
Renewable diesel producers utilization at 77%, highest because July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, highest since June 2023
Better credit prices, stronger diesel need spurred higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable 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 producers made use of 77% of their total operable capability in October, the greatest since July 2024, the information revealed. Biodiesel plant to 89%, the highest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers dependent on federal government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for suppliers, as it enjoys much better rewards and can substitute diesel totally.
Total biodiesel production capacity 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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as the majority of brand-new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pressed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the industry in October was boosted mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, issued 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 helped by stronger need for diesel, which hit an one-year high in October, raising costs 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., 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 best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)