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

Biodiesel manufacturers utilization rate struck 89% in Oct, highest because June 2023

Better credit prices, more powerful diesel need spurred greater activity - expert

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

Renewable diesel producers utilized 77% of their overall operable capacity in October, the highest because July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the greatest because 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 need development slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it gains better rewards and can replace 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pressed renewable diesel output capacity 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 improved primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, issued 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 need for diesel, which struck an one-year high in October, raising rates for both the conventional fuel and its alternatives, he said.

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 truly had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)