US Biofuel Producers Ramped up in Oct As Profitability Improved,

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

Biodiesel manufacturers utilization rate struck 89% in Oct, greatest given that June 2023

Better credit rates, more powerful diesel demand spurred higher activity – analyst

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

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the greatest because July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the highest considering that 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 demand growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers reliant on government rewards such as tax credits. Among the 2, renewable diesel has emerged as the favored fuel for suppliers, as it gains better rewards and can substitute diesel totally.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as the majority of new biofuel plants opened in the previous three years were geared 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, for the market in October was enhanced primarily 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 renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola said.

Margins were likewise helped by more powerful need for diesel, which struck an one-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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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