Renewable diesel producers usage at 77%, greatest because July - AEGIS

Biodiesel manufacturers utilization rate hit 89% in Oct, greatest because June 2023

Better credit costs, stronger diesel need stimulated higher activity - expert

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

Renewable diesel manufacturers made use of 77% of their total operable capacity in October, the greatest considering that July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the highest considering that 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 demand growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for suppliers, as it gains much better incentives and can replace diesel totally.

Total biodiesel production capability 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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pressed eco-friendly 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 primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were likewise assisted by stronger need for diesel, which struck an one-year high in October, raising prices for both the standard fuel and its alternatives, 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 actually had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)