US Biofuel Producers Increase in Oct As Profitability Improved,

Renewable diesel manufacturers usage at 77%, greatest since July – AEGIS

Biodiesel producers utilization rate struck 89% in Oct, highest since June 2023

Better credit costs, stronger diesel demand stimulated greater activity – expert

NEW YORK CITY, Jan 3 (Reuters) – U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.

Renewable diesel producers made use of 77% of their total operable capability in October, the highest considering that July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.

Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as demand growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.

Both eco-friendly diesel and are more expensive to produce than diesel, making suppliers reliant on federal government incentives such as tax credits. Among the 2, eco-friendly diesel has actually become the preferred fuel for suppliers, as it enjoys much 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 information 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 most brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed eco-friendly 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 improved primarily by a surge in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and renewable 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 stronger demand for diesel, which struck a 1 year high in October, raising costs for both the conventional fuel and its options, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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