US biodiesel production in January up 33% year-on-year

US production of biodiesel was up 33% in January compared with the equivalent period in 2017, according to figures released this week by the US Energy Information Administration (EIA).

US production of biodiesel was 124 million gallons in January 2018, up from 94 million gallons in the equivalent month in 2017 and up 17% higher than the 105 million gallons produced in January 2016.

The figures reflect a period during which the US government announced it was calibrating higher duties on biodiesel imports from Argentina and Indonesia.

Anti-dumping and anti-subsidy duties will make it virtually impossible for biodiesel exporters from Argentina and Indonesia to sell into the US.

There will be combined rates of up to 159% on the Argentine fuel, which is made out soybean oil, and up to 341% on the Indonesian variety, drawn from palm oil.

Last month, the US government calculated final dumping rates ranging from 60.4% to 86.4% for Argentine producers, and 92.5% to 276.6% for Indonesian producers.

Biodiesel output in January is 24 million gallons less than in December 2017, reflecting “a pretty typical seasonal pattern”, the EIA told Energy Census. 

“We have had an on again off again tax credit for US biodiesel production that has typically expired at the end of each year, so this in the past has incentivised producers to produce as much as possible before the year ends to capture this credit,” the EIA said in response to emailed questions.

The credit is often applied retroactively, for example this most recent year, where the tax credit was re-enacted in February 2018 but was only for 2017 production. 

“So either producers have the tax credit currently active and are maximizing production to capture that credit, or in some cases they might even be expecting the tax credit to be passed after the year is over, retroactively, since this precedent has been set so many times," the EIA explained.

The agency said the US Renewable Fuel Standard is also likely to incentivise production in December, depending on where compliance levels stand and the level of demand from obligated parties to meet RFS targets.