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

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

Better credit prices, more powerful diesel demand spurred 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 stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the highest given that July 2024, the information showed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

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

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

Total biodiesel production capability 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 capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed eco-friendly diesel output capability 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 worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola said.

Margins were also assisted by stronger need for diesel, which hit a 1 year high in October, raising costs for both the traditional 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., also rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)