Renewable diesel producers usage at 77%, highest since July - AEGIS
Biodiesel manufacturers usage rate struck 89% in Oct, highest since June 2023
Better credit rates, stronger diesel need stimulated greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel producers used 77% of their overall operable capacity in October, the highest considering that July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the highest because June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers based on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it reaps 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 information 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 a lot of new biofuel plants opened in the past 3 years were tailored towards it.
Still, oversupply pushed eco-friendly 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 improved 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, increased 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 struck a 1 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., 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 said. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Increase in Oct As Profitability Improved,
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