Renewable diesel production in the USA recorded its largest monthly drop in the three years since the industry began its rapid expansion, according to data from the US Energy Information Administration (EIA) reported by Hydrocarbon Processing.
Production of biomass-based renewable diesel and other biofuels, excluding biodiesel and ethanol, fell by about 299M gallons/year (1.13bn litres/yr) from June to about 4.60bn gallons (17.41bn litres)/yr in July, the 1 October report said.
It was the second time production had declined since the EIA started recording volumes in 2021, Hydrocarbon Processing wrote.
Established oil refiners and start-ups had invested in renewable diesel in recent years as government mandated consumption targets and subsidies had led to lower production costs, the report said.
However, output from new plants was starting to outpace demand, leading to oversupply in the market, according to the report.
Vertex Energy, one of the newest entrants in the US renewable diesel industry, had filed for Chapter 11 bankruptcy protection in the week before the report, just months after it had paused output, citing macroeconomic weakness, the report said.
Demand for vegetable oils as feedstock for renewable diesel production, including canola oil, corn oil and soyabean oil, dropped more than 5.6% from June to 1.168bn lb (530M kg) in July, the EIA data published on 30 September showed.
Meanwhile, demand for the same feedstocks from facilities producing biodiesel increased by 5.6% from June to 866M lb (393M kg) in July.
Demand for waste oils, fats and greases - such as tallow and used cooking oil - increased to 1.43bn lb (649M kg) in July from 1.38bn lb (626M kg) in June, the data showed.
The consumption levels indicated biofuel producers were running their plants below capacity, Zander Capozzola, vice president of renewable fuels at AEGIS Hedging, was quoted as saying.
At current capacity, renewable diesel plants could process at least 3.162bn lb (1.43bn kg) of feedstocks/month, while biodiesel producers would consume another 1.288bn lb (584M kg), if they were running at full capacity, Capozzola said.
