US Biofuel Producers Increase in Oct As Profitability Improved,

Renewable diesel manufacturers usage at 77%, highest considering that July – AEGIS

Biodiesel producers utilization rate hit 89% in Oct, greatest considering that June 2023

Better credit costs, more powerful diesel need spurred higher activity – expert

NEW YORK CITY, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

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

Rising utilization rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers based on government rewards such as tax credits. Among the 2, renewable diesel has actually emerged as the favored fuel for providers, as it enjoys much better incentives and can replace diesel totally.

Total biodiesel production capacity 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pressed renewable diesel output capacity 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 generally by a surge in the worth of credits required for compliance with federal biofuel mandates, said 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 success for making the fuels, Capozzola said.

Margins were also helped by stronger demand for diesel, which hit an one-year high in October, raising rates for both the conventional fuel and its options, 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 whatever rowing in the right instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)