Producers, analysts expect reduced margins to impact biomass-based diesel production

Producers, analysts expect reduced margins to impact biomass-based diesel production

Biomass-based diesel suppliers face a challenging market environment for facilities that have been using soybean oil as their sole or major feedstock choice, sources said. Fluctuations in feedstock costs have caused margins to compress since the third quarter of 2023.

Incremental operations that either use soybean oil as their main feedstock, do not have pre-treatment capabilities of their own, and/or do not have feedstock flexibility, are finding themselves in a difficult economic situation, according to market participants.

Several soybean oil based, non-vertically integrated biodiesel facilities have either idled or are currently idling because the economics are not in place to continue. Chevron closed two facilities this year, and the company is known for its feedstock flexibility.

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