Renewable diesel manufacturers utilization at 77%, highest since July - AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, greatest given that June 2023

Better credit rates, more powerful diesel need spurred higher activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. sustainable 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 utilized 77% of their total operable capacity in October, the highest considering that July 2024, the information showed. Biodiesel plant utilization increased to 89%, the greatest considering that June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as demand development slowed, leaving the marketplace oversupplied and a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers depending on government rewards such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for suppliers, as it gains better incentives and can substitute diesel totally.

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 capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pressed sustainable diesel output capability 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 improved generally by a rise in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 said.

Margins were likewise assisted by stronger demand for diesel, which hit an one-year high in October, raising rates 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., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York City