US Biofuel Producers Increase In Oct As Profitability Improved

Renewable diesel producers usage at 77%, highest because July - AEGIS


Biodiesel producers utilization rate hit 89% in Oct, highest since June 2023


Better credit costs, stronger diesel demand stimulated greater activity - analyst


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


Renewable diesel producers made use of 77% of their overall operable capability in October, the highest considering that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.


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


Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has actually become the favored fuel for providers, as it reaps much better rewards and can replace diesel completely.


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.


output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as many brand-new biofuel plants opened in the previous 3 years were tailored 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, success for the industry in October was enhanced primarily by a rise in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable 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 stated.


Margins were also assisted by stronger need for diesel, which hit an one-year high in October, raising rates for both the traditional 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.


"You really had everything rowing in the right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)