US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel manufacturers utilization at 77%, highest because July – AEGIS

Biodiesel producers utilization rate hit 89% in Oct, greatest since June 2023

Better credit rates, more powerful diesel demand spurred greater activity – analyst

NEW YORK, Jan 3 (Reuters) – U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the highest considering that July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the greatest considering that June 2023.

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

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

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 most new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed renewable diesel output capacity 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 increased mainly by a surge in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and renewable 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 said.

Margins were also assisted by more powerful demand for diesel, which hit a 1 year high in October, raising costs 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You actually had whatever rowing in the ideal instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)