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

Biodiesel producers utilization rate hit 89% in Oct, greatest because June 2023

Better credit costs, stronger diesel demand greater activity - expert

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

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

Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for providers, as it reaps 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 data revealed, as many new biofuel plants opened in the previous three years were tailored 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, profitability for the market in October was enhanced generally by a rise in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable 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 stronger demand for diesel, which hit an one-year high in October, raising prices for both the conventional 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., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City