US Biofuel Producers Increase in Oct As Profitability Improved,

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

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

Better credit prices, stronger diesel demand spurred greater activity – expert

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

Renewable diesel producers made use of 77% of their total operable capacity in October, the highest considering that July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest since June 2023.

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

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

Total biodiesel production capability 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 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, profitability for the market in October was increased generally by a rise in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable 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, enhancing profitability for making the fuels, Capozzola said.

Margins were also helped by more powerful need for diesel, which hit 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 rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You really had everything rowing in the ideal direction in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)