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

Biodiesel manufacturers utilization rate struck 89% in Oct, highest since June 2023

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

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

Renewable diesel manufacturers made use of 77% of their total operable capability in October, the highest given that July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need growth slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making on government incentives such as tax credits. Among the 2, sustainable diesel has become the favored fuel for providers, as it enjoys better rewards and can substitute 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 information revealed, as many brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pressed 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 industry in October was increased primarily by a surge in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable 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 profitability for making the fuels, Capozzola stated.

Margins were likewise helped by more powerful demand for diesel, which hit a 1 year high in October, raising prices for both the standard fuel and its options, he said.

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 truly had everything rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York