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Renewable diesel manufacturers utilization at 77%, highest since July - AEGIS
Biodiesel producers utilization rate hit 89% in Oct, highest considering that June 2023
Better credit costs, stronger diesel need stimulated higher activity - analyst
NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers used 77% of their overall operable capability in October, the highest given that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest because June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.
Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for providers, as it reaps 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of new biofuel plants opened in the previous three years were geared towards it.
Still, oversupply pushed sustainable 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 enhanced primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and sustainable 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 stronger need for diesel, which hit 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You actually had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York
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