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

Biodiesel producers usage rate struck 89% in Oct, highest given that June 2023

Better credit costs, stronger diesel demand stimulated higher activity - analyst

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

Renewable diesel manufacturers used 77% of their overall operable capacity in October, the highest considering that July 2024, the data showed. 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 industry, after operators withstood a rough start to 2024 as demand development slowed, leaving the marketplace oversupplied and forcing a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more costly to produce than diesel, making providers dependent on government rewards such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for providers, as it enjoys much better rewards and can substitute diesel totally.

Total biodiesel production capacity 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 new biofuel plants opened in the past 3 years were tailored 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 enhanced mainly by a surge in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

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

Margins were likewise assisted by more powerful need for diesel, which hit an one-year high in October, raising costs for both the traditional 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 actually had everything rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York