Renewable diesel producers usage at 77%, greatest given that July - AEGIS

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

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

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

Renewable diesel manufacturers utilized 77% of their total operable capacity in October, the greatest considering that July 2024, the information showed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.

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

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the favored fuel for providers, as it reaps better incentives and can replace diesel entirely.

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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed renewable 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 increased mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.

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

Margins were likewise assisted by more powerful demand for diesel, which struck a 1 year high in October, raising costs for both the conventional fuel and its alternatives, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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