US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel manufacturers utilization at 77%, highest considering that July – AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, greatest since June 2023

Better credit costs, stronger diesel need spurred greater activity – analyst

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

Renewable diesel manufacturers made use of 77% of their total operable capacity in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.

Rising utilization rates and 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 number of biodiesel plant closures.

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

Total biodiesel production capacity 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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed renewable 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 generally by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola said.

Margins were likewise helped by more powerful need for diesel, which struck a 1 year high in October, raising rates for both the traditional 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., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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