US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel manufacturers usage at 77%, greatest because July – AEGIS

Biodiesel producers usage rate struck 89% in Oct, highest because June 2023

Better credit prices, more powerful diesel demand spurred higher activity – expert

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

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the greatest because July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.

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

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers reliant on federal government incentives such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for suppliers, as it reaps much better rewards and can substitute diesel entirely.

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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most new opened in the previous 3 years were tailored towards it.

Still, oversupply pressed sustainable 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 boosted primarily by a surge 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, 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 likewise assisted by stronger need for diesel, which hit an one-year high in October, raising costs for both the conventional fuel and its alternatives, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You truly had whatever rowing in the ideal direction in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)