Renewable diesel manufacturers usage at 77%, highest since July - AEGIS
Biodiesel manufacturers utilization rate hit 89% in Oct, greatest because June 2023
Better credit prices, more powerful diesel need stimulated greater activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.
Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the highest given that July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the highest since 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 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 suppliers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for suppliers, as it enjoys better incentives and can entirely.
Total biodiesel production capability 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 increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of new biofuel plants opened in the past 3 years were tailored towards it.
Still, oversupply pushed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the market in October was boosted primarily by a surge in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola said.
Margins were likewise assisted by stronger demand for diesel, which struck an one-year high in October, raising costs 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., 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 instructions 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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