Renewable diesel producers utilization at 77%, greatest considering that July - AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, greatest given that June 2023

Better credit rates, more powerful diesel need stimulated greater activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

Renewable diesel producers used 77% of their total operable capacity in October, the highest considering that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the highest because June 2023.

Rising usage rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for suppliers, as it gains much better incentives and can replace diesel totally.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed renewable 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 enhanced mainly by a rise in the worth of credits needed for compliance with federal biofuel mandates, said 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, enhancing success for making the fuels, Capozzola stated.

Margins were likewise assisted by stronger demand for diesel, which struck a 1 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 in the U.S., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)