US Biofuel Producers Ramped Up In Oct As Profitability Improved

Renewable diesel manufacturers utilization at 77%, greatest because July - AEGIS


Biodiesel manufacturers utilization rate hit 89% in Oct, highest since June 2023


Better credit prices, stronger diesel demand stimulated higher activity - expert


NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase 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 used 77% of their total operable capability in October, the highest because July 2024, the data revealed. Biodiesel plant usage increased to 89%, the greatest given that June 2023.


Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.


Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it gains much better incentives and can replace diesel totally.


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 capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as many new biofuel plants opened in the previous three years were geared 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, profitability for the industry in October was boosted generally by a surge in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.


D4 Renewable Identification Numbers, provided for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola stated.


Margins were likewise helped by stronger demand for diesel, which hit a 1 year high in October, raising prices for both the standard fuel and its options, he said.


Prices for credits under the Low Carbon Fuel Standard program of California, where most are consumed in the U.S., likewise 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 best direction in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)