1 US Biofuel Producers Increase in Oct As Profitability Improved,
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Renewable diesel manufacturers usage at 77%, greatest given that July - AEGIS

Biodiesel manufacturers utilization rate hit 89% in Oct, greatest because June 2023

Better credit rates, stronger diesel demand stimulated greater activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel manufacturers used 77% of their overall operable capacity in October, the highest given that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest considering that June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand growth slowed, leaving the marketplace oversupplied and forcing a variety of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it gains better incentives and can substitute diesel completely.

Total biodiesel production capacity 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 increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of new biofuel plants opened in the previous 3 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 primarily by a surge in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly 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 stated.

Margins were also assisted by more powerful demand for diesel, which struck an one-year high in October, raising costs for both the conventional fuel and its alternatives, he said.

Prices for credits under the Low Carbon Fuel 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 truly had everything rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City