US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel manufacturers utilization at 77%, greatest given that July – AEGIS

Biodiesel producers usage rate struck 89% in Oct, greatest considering that June 2023

Better credit costs, stronger diesel need stimulated greater activity – expert

NEW YORK, Jan 3 (Reuters) – U.S. sustainable diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the highest given that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for suppliers, as it enjoys much better rewards and can replace diesel totally.

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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most brand-new biofuel plants opened in the previous three years were tailored 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, success for the market in October was increased generally by a rise in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable 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 said.

Margins were also helped by stronger need for diesel, which hit an one-year high in October, raising rates for both the conventional fuel and its alternatives, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from listed 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; Editing by David Gregorio)