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

Biodiesel producers utilization rate hit 89% in Oct, highest since June 2023

Better credit rates, stronger diesel need spurred higher activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

Renewable diesel producers made use of 77% of their total operable capacity in October, the greatest considering that July 2024, the information showed. Biodiesel plant usage increased to 89%, the greatest since 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 need growth slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for suppliers, as it enjoys much better incentives and can substitute 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 capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of brand-new biofuel plants opened in the past 3 years were geared 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 enhanced primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable 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 also helped by stronger need for diesel, which hit an one-year high in October, raising costs for both the traditional fuel and its alternatives, he stated.

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 truly had whatever rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)