Renewable diesel producers utilization at 77%, greatest considering that July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest since June 2023
Better credit prices, stronger diesel need stimulated greater activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the highest since July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the greatest given 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 need growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, sustainable diesel has actually become the favored fuel for providers, as it gains 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 data launched 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 information showed, as many new biofuel plants opened in the past 3 years were tailored towards it.
Still, oversupply pushed renewable 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 needed for compliance with federal biofuel requireds, said Zander Capozzola, of renewable 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 profitability for making the fuels, Capozzola stated.
Margins were likewise assisted by stronger need for diesel, which hit a 1 year high in October, raising prices 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 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 ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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