Renewable diesel manufacturers usage at 77%, highest given that July - AEGIS
Biodiesel manufacturers utilization rate hit 89% in Oct, greatest considering that June 2023
Better credit prices, stronger diesel demand stimulated higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of their total operable capability in October, the highest because July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the greatest since 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 development slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it reaps much better incentives and can substitute diesel entirely.
Total biodiesel production capability 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 rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many brand-new biofuel plants opened in the past 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, success for the industry in October was enhanced mainly 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, released for biodiesel and sustainable 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 stated.
Margins were likewise helped by more powerful demand for diesel, which struck 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 from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You really had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Ramped up in Oct As Profitability Improved,
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