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

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

Better credit costs, stronger diesel need stimulated greater activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase 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 utilized 77% of their total operable capability in October, the greatest considering that July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the greatest considering that June 2023.

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

Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers reliant on government rewards such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for providers, as it gains much better incentives and can replace diesel totally.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as the majority of brand-new biofuel plants opened in the previous 3 years were geared towards it.

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

In addition to plant closures, success for the market in October was boosted generally by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable 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, enhancing profitability for making the fuels, Capozzola stated.

Margins were also helped by more powerful demand for diesel, which hit an one-year high in October, raising prices for both the 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., likewise 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 ideal direction in October,” Capozzola said. (Reporting by Shariq Khan in New York City