Renewable diesel manufacturers utilization at 77%, greatest because July - AEGIS

Biodiesel producers usage rate struck 89% in Oct, highest since June 2023

Better credit costs, more powerful diesel demand stimulated greater activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data put together by group AEGIS Hedging.

Renewable diesel producers used 77% of their total operable capacity in October, the highest considering that July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the greatest given that June 2023.

Rising usage rates and improving 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 renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers reliant on federal government incentives such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for suppliers, as it reaps much better rewards and can replace diesel entirely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched 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 information showed, as the majority of brand-new biofuel plants opened in the past 3 years were tailored 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, success for the industry in October was increased primarily by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly 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 said.

Margins were also helped by stronger demand for diesel, which hit a 1 year high in October, raising prices for both the traditional fuel and its options, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York