US Biofuel Producers Increase in Oct As Profitability Improved,

Renewable diesel at 77%, highest because July – AEGIS

Biodiesel producers usage rate hit 89% in Oct, highest given that June 2023

Better credit costs, more powerful diesel demand stimulated greater activity – analyst

NEW YORK CITY, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel producers ramped up 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 manufacturers made use of 77% of their overall operable capacity in October, the greatest considering that July 2024, the information revealed. Biodiesel plant usage rose to 89%, the greatest considering that June 2023.

Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, renewable diesel has become the preferred fuel for suppliers, as it gains 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 information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most new biofuel plants opened in the past 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 market in October was boosted primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly 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 also helped by more powerful need for diesel, which struck a 1 year high in October, raising prices 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You really had everything rowing in the best direction in October,” Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)