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

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

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

NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers ramped up 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 utilized 77% of their total operable capability in October, the greatest given that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, sustainable diesel has become the favored fuel for providers, as it enjoys better incentives and can substitute diesel entirely.

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 capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of brand-new biofuel plants opened in the past 3 years were tailored 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, profitability for the market in October was improved mainly by a rise in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were likewise helped by more powerful demand 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., likewise 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 best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)