US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel producers usage at 77%, highest given that July – AEGIS

Biodiesel producers utilization rate hit 89% in Oct, greatest since June 2023

Better credit prices, more powerful diesel need spurred higher activity – analyst

NEW YORK, Jan 3 (Reuters) – U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the highest because July 2024, the information revealed. Biodiesel plant usage rose to 89%, the greatest because June 2023.

Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators endured 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 costly to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for suppliers, as it reaps much better incentives and can replace 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pushed eco-friendly diesel output 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the market in October was enhanced primarily by a surge in the worth of credits needed 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 sustainable diesel production, increased 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 helped by more powerful need for diesel, which hit an one-year high in October, raising rates for both the traditional 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 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)