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

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

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

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

Renewable diesel producers utilized 77% of their overall operable capability in October, the greatest because July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.

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

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers depending on government rewards such as tax credits. Among the 2, renewable diesel has actually emerged as the favored fuel for providers, as it gains much better incentives and can replace diesel totally.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data released 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 a lot of brand-new biofuel plants opened in the past three years were geared towards it.

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

In addition to plant closures, profitability for the industry in October was primarily by a surge in the worth of credits required 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, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola stated.

Margins were likewise assisted by more powerful demand for diesel, which hit an one-year high in October, raising prices 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 really had everything rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City