Renewable diesel producers usage at 77%, highest because July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest since June 2023
Better credit prices, stronger diesel need spurred greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest because July 2024, the information showed. Biodiesel plant usage rose to 89%, the highest because 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 demand growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers based on government rewards such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for providers, as it enjoys much better incentives and can replace diesel entirely.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to data launched 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 information revealed, as most new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pushed 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 market in October was increased mainly by a surge in the worth of credits required 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 eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola said.
Margins were likewise helped by stronger need for diesel, which hit a 1 year high in October, raising costs for both the traditional 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 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)
