US Biofuel Producers Increase in Oct As Profitability Improved,

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

Biodiesel producers hit 89% in Oct, greatest given that June 2023

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

NEW YORK CITY, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.

Renewable diesel producers utilized 77% of their overall operable capacity in October, the greatest given that July 2024, the information showed. Biodiesel plant usage rose to 89%, the highest considering that June 2023.

Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers dependent on federal government incentives such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for suppliers, as it reaps much better incentives and can substitute diesel totally.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pushed sustainable 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 increased mainly by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 stated.

Margins were also helped by more powerful demand for diesel, which hit a 1 year high in October, raising rates for both the standard 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 increased 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 best instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)