Renewable diesel manufacturers usage at 77%, highest given that July - AEGIS

Biodiesel producers usage rate struck 89% in Oct, greatest since June 2023

Better credit costs, stronger diesel need stimulated higher activity - expert

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

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

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

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

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 capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed 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 market in October was boosted primarily by a surge in the value of credits required for compliance with federal biofuel mandates, 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 helped by more powerful need for diesel, which hit an one-year high in October, raising prices 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 rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You really had everything rowing in the best direction in October,” Capozzola stated. (Reporting by Shariq Khan in New York City