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

Biodiesel manufacturers usage rate struck 89% in Oct, highest because June 2023

Better credit prices, more powerful diesel demand spurred higher activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel manufacturers used 77% of their total operable capability in October, the greatest given that July 2024, the data showed. plant usage increased to 89%, the greatest given that June 2023.

Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand growth slowed, leaving the market oversupplied and forcing a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers reliant on federal government rewards such as tax credits. Among the 2, renewable diesel has become the favored fuel for suppliers, as it gains much better rewards and can substitute diesel completely.

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 new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pressed eco-friendly 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 boosted mainly by a surge 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 eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola said.

Margins were likewise helped by stronger need 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 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 stated. (Reporting by Shariq Khan in New York