Renewable diesel producers usage at 77%, highest given that July - AEGIS
Biodiesel producers utilization rate struck 89% in Oct, highest considering that June 2023
Better credit rates, stronger diesel demand spurred greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their total operable capability in October, the highest given that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a variety of plant closures.
Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it enjoys much better incentives and can substitute diesel completely.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information released 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 revealed, as most new biofuel plants opened in the past three years were geared towards it.
Still, oversupply pressed sustainable 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 increased generally by a surge in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.
Margins were likewise assisted by stronger demand for diesel, which struck a 1 year high in October, raising prices 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 increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had whatever rowing in the best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York
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US Biofuel Producers Increase in Oct As Profitability Improved,
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