Renewable diesel producers utilization at 77%, highest because July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, highest since June 2023
Better credit costs, more powerful diesel need spurred greater activity - analyst
NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their total operable capability in October, the greatest considering that July 2024, the data revealed. Biodiesel plant usage rose to 89%, the highest because June 2023.
Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as demand development slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually emerged as the favored fuel for providers, as it reaps much better incentives and can substitute 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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the previous three years were geared towards it.
Still, oversupply pushed eco-friendly diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the market in October was enhanced generally by a rise in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable 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 profitability for making the fuels, Capozzola stated.
Margins were likewise helped by more powerful need for diesel, which hit 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 in the U.S., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had everything rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Increase in Oct As Profitability Improved,
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