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

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

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

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up 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 used 77% of their overall operable capability in October, the greatest considering that July 2024, the information showed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.

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

Both renewable diesel and biodiesel are more costly to produce than diesel, making providers reliant on government incentives such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for suppliers, as it reaps much better rewards and can replace diesel completely.

Total biodiesel production capacity 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 capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as many new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pressed sustainable diesel output 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 mainly by a rise in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and sustainable diesel production, rose 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 demand for diesel, which hit an one-year high in October, raising costs for both the traditional 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., also 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 said. (Reporting by Shariq Khan in New York