Renewable diesel producers usage at 77%, greatest considering that July - AEGIS
Biodiesel producers usage rate struck 89% in Oct, greatest considering that June 2023
Better credit prices, more powerful diesel need spurred higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel producers used 77% of their total operable capacity in October, the greatest considering that July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for suppliers, as it gains better rewards and can replace diesel totally.
Total biodiesel production capacity 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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the past 3 years were tailored towards it.
Still, oversupply pushed renewable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was enhanced primarily by a rise in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and eco-friendly 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 assisted by more powerful demand for diesel, which hit an one-year high in October, raising costs for both the standard fuel and its options, he stated.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise 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 best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)
