US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel producers usage at 77%, greatest given that July – AEGIS

Biodiesel manufacturers utilization rate struck 89% in Oct, greatest considering that June 2023

Better credit prices, stronger diesel demand spurred higher activity – analyst

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

Renewable diesel manufacturers used 77% of their total operable capability in October, the highest given that July 2024, the data showed. Biodiesel plant usage rose to 89%, the greatest since June 2023.

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

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

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information 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 data revealed, as most brand-new biofuel plants opened in the past three 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, success for the market in October was boosted generally by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.

Margins were also helped by stronger demand for diesel, which hit an one-year high in October, raising costs for both the standard fuel and its alternatives, he stated.

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 whatever rowing in the right direction in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)