Renewable diesel producers utilization at 77%, highest because July - AEGIS
Biodiesel manufacturers usage rate struck 89% in Oct, highest considering that June 2023
Better credit prices, more powerful diesel demand spurred greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their overall operable capability in October, the highest since July 2024, the data revealed. Biodiesel plant usage rose to 89%, the greatest given that June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand development slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers dependent on federal government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for providers, as it enjoys much better incentives and can replace diesel completely.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data released by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the revealed, as many new biofuel plants opened in the previous 3 years were tailored towards it.
Still, oversupply pressed eco-friendly 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 mainly by a surge in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable 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 said.
Margins were likewise helped by stronger demand for diesel, which struck a 1 year high in October, raising rates for both the traditional 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., likewise 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 right instructions in October," Capozzola said. (Reporting by Shariq Khan in New York
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US Biofuel Producers Increase in Oct As Profitability Improved,
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