Renewable diesel manufacturers utilization at 77%, highest since July - AEGIS
Biodiesel manufacturers usage rate hit 89% in Oct, highest since June 2023
Better credit prices, more powerful diesel demand spurred greater activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their overall operable capability in October, the highest considering that July 2024, the information showed. Biodiesel plant utilization rose 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 development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.
Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, renewable diesel has emerged as the favored fuel for suppliers, as it enjoys better rewards and can replace diesel entirely.
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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as many new biofuel plants opened in the past 3 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, profitability for the industry in October was increased mainly by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable 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, improving success for making the fuels, Capozzola stated.
Margins were likewise assisted by more powerful need for diesel, which struck a 1 year high in October, raising rates for both the standard fuel and its options, he stated.
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 right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)
