Renewable diesel producers usage at 77%, greatest since July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest since June 2023
Better credit rates, more powerful diesel need spurred greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the highest since July 2024, the data showed. Biodiesel plant usage rose to 89%, the greatest considering that June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as need growth 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 incentives such as tax . Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it enjoys better rewards 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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of new biofuel plants opened in the previous three years were geared towards it.
Still, oversupply pressed sustainable diesel output capability 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 increased mainly by a rise in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving success 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 conventional 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 everything rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York
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US Biofuel Producers Increase in Oct As Profitability Improved,
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