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

Biodiesel producers usage rate struck 89% in Oct, highest considering that June 2023

Better credit rates, stronger diesel need stimulated greater activity - analyst

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

Renewable diesel producers made use of 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest given that June 2023.

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

Both renewable diesel and biodiesel are more costly to produce than diesel, making providers dependent on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it reaps better rewards 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 released 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 information revealed, as most brand-new biofuel plants opened in the previous 3 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 improved generally by a surge in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola stated.

Margins were likewise helped by stronger need for diesel, which struck an one-year high in October, raising prices for both the standard fuel and its options, he stated.

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