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

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

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

NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers increase 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 producers used 77% of their total operable capability in October, the highest because July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers dependent on federal government rewards such as tax credits. Among the 2, renewable diesel has as the favored fuel for providers, as it enjoys 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 data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as many brand-new biofuel plants opened in the past 3 years were geared 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, profitability for the industry in October was increased primarily by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly 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 said.

Margins were likewise assisted by more powerful need for diesel, which struck a 1 year high in October, raising costs for both the conventional 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., likewise increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You actually had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)