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

Biodiesel manufacturers utilization rate struck 89% in Oct, greatest given that June 2023

Better credit costs, more powerful diesel need spurred higher activity - expert

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 information assembled by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the greatest given that July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the greatest considering that June 2023.

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

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for providers, as it enjoys much better incentives and can replace diesel completely.

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

Still, oversupply pushed sustainable 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 enhanced mainly by a rise in the value of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 assisted by more powerful need for diesel, which struck a 1 year high in October, raising prices for both the 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., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You actually had everything rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City