Renewable diesel producers usage at 77%, highest since July - AEGIS

Biodiesel producers utilization rate hit 89% in Oct, highest given that June 2023

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

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest given 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 need growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

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

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 capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed sustainable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the market in October was increased mainly by a rise 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, released for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola said.

Margins were likewise assisted by more powerful need for diesel, which hit a 1 year high in October, raising costs for both the conventional 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 truly had everything rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City