US Biofuel Producers Ramped up in Oct As Profitability Improved,

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

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

Better credit prices, stronger diesel need spurred greater activity – analyst

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

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

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

Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for providers, as it gains much better incentives and can replace diesel totally.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of brand-new biofuel plants opened in the past three years were geared 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 enhanced mainly by a rise in the value of credits needed for compliance with federal biofuel requireds, stated 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, improving profitability for making the fuels, Capozzola stated.

Margins were also assisted by stronger demand for diesel, which struck an one-year high in October, raising rates 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 consumed in the U.S., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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