Renewable diesel manufacturers usage at 77%, greatest considering that July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, highest since June 2023
Better credit prices, more powerful diesel demand stimulated greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capability in October, the greatest because July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the highest since June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after a rough start to 2024 as need development slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.
Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on federal government incentives such as tax credits. Among the 2, renewable diesel has become the favored fuel for suppliers, as it gains better rewards and can substitute diesel entirely.
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 rose almost 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 past three years were tailored 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, profitability for the market in October was increased generally by a rise in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, increased 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 need for diesel, which struck an one-year high in October, raising costs for both the standard 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 rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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