US Biofuel Producers Ramped Up In Oct As Profitability Improved

Renewable diesel manufacturers usage at 77%, highest given that July - AEGIS


Biodiesel producers usage rate hit 89% in Oct, highest since June 2023


Better credit rates, more powerful diesel demand stimulated higher activity - analyst


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


Renewable diesel producers used 77% of their overall operable capacity in October, the highest given that July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the highest because June 2023.


Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.


Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers reliant on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it gains better rewards and can substitute diesel completely.


Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information released 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 data showed, as a lot of 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, success for the industry in October was enhanced primarily by a surge in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.


D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola said.


Margins were likewise helped by more powerful demand for diesel, which struck a 1 year high in October, raising rates for both the standard 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 truly had everything rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)