Renewable diesel producers usage at 77%, highest considering that July - AEGIS
Biodiesel producers usage rate hit 89% in Oct, highest considering that June 2023
Better credit prices, stronger diesel demand spurred greater activity - expert
NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers 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 producers used 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest given that June 2023.
Rising usage rates and enhancing margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as demand development slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it reaps much better incentives and can substitute diesel totally.
Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to 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 showed, as many brand-new biofuel plants opened in the past three years were tailored towards it.
Still, oversupply pressed sustainable 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 increased generally by a surge in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola said.
Margins were also assisted by more powerful demand for diesel, which struck a 1 year high in October, raising rates for both the traditional 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., 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 right direction in October," Capozzola said. (Reporting by Shariq Khan in New York
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US Biofuel Producers Increase in Oct As Profitability Improved,
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