Renewable diesel manufacturers usage at 77%, greatest because July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, highest because June 2023
Better credit costs, more powerful diesel demand stimulated higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel producers made use of 77% of their total in October, the highest because July 2024, the data revealed. Biodiesel plant usage increased to 89%, the greatest considering that June 2023.
Rising usage rates and improving margins are a welcome relief for the biofuels industry, 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 costly to produce than diesel, making providers reliant on federal government rewards such as tax credits. Among the 2, sustainable diesel has become the favored fuel for suppliers, as it enjoys much better incentives and can substitute 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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as the majority of brand-new biofuel plants opened in the previous three years were tailored towards it.
Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was improved generally by a surge in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, provided for biodiesel and sustainable 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 likewise assisted by stronger need for diesel, which hit an one-year high in October, raising prices for both the conventional 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had whatever rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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