Renewable diesel manufacturers utilization at 77%, greatest since July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest given that June 2023
Better credit costs, stronger diesel demand stimulated higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. sustainable 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 used 77% of their overall operable capability in October, the highest because July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest because June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.
Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers dependent on federal government incentives such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for providers, as it enjoys better rewards and can substitute diesel totally.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data 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 many new biofuel plants opened in the previous 3 years were geared towards it.
Still, oversupply pushed renewable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, profitability for the market in October was enhanced primarily by a rise in the value of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola stated.
Margins were also helped by more powerful need for diesel, which struck an one-year high in October, raising costs 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 really had whatever rowing in the right instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City
1
US Biofuel Producers Increase in Oct As Profitability Improved,
evanholmes2254 edited this page 3 weeks ago