US Biofuel Producers Ramped up in Oct As Profitability Improved,

Renewable diesel producers utilization at 77%, greatest because July – AEGIS

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

Better credit rates, stronger diesel demand stimulated higher activity – expert

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

Renewable diesel producers utilized 77% of their overall operable capability in October, the greatest since July 2024, the information showed. Biodiesel plant utilization increased to 89%, the highest since 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, the market oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has emerged as the preferred fuel for providers, as it gains 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 data released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as many new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed eco-friendly diesel output capacity 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 primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels 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, enhancing success for making the fuels, Capozzola stated.

Margins were also assisted by stronger need for diesel, which struck an one-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., likewise rose 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 instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)