US Biofuel Producers Increase in Oct As Profitability Improved,

Renewable diesel manufacturers usage at 77%, highest because July – AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, highest given that June 2023

Better credit costs, more powerful diesel demand spurred greater activity – analyst

NEW YORK, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 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 given that June 2023.

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for providers, as it gains better rewards 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 released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of brand-new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pressed 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 worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided 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 stronger need for diesel, which struck an one-year high in October, raising prices for both the traditional fuel and its alternatives, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are in the U.S., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You actually had whatever rowing in the best instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)