Renewable diesel manufacturers utilization at 77%, greatest considering that July - AEGIS
Biodiesel producers utilization rate struck 89% in Oct, highest given that June 2023
Better credit prices, stronger diesel demand spurred higher activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their total operable capacity in October, the highest considering that July 2024, the data revealed. Biodiesel plant usage increased to 89%, the greatest considering that June 2023.
Rising utilization rates and enhancing 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 forcing a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers depending on government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the preferred fuel for providers, as it reaps much better incentives and can substitute diesel totally.
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 capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most brand-new biofuel plants opened in the past three 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, success for the market in October was enhanced mainly by a rise in the value of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable 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 likewise helped by more powerful need for diesel, which hit an one-year high in October, raising rates for both the standard fuel and its alternatives, he said.
Prices for credits under the Low Carbon Fuel Standard 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 truly had whatever rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York
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US Biofuel Producers Increase in Oct As Profitability Improved,
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