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

Biodiesel producers utilization rate struck 89% in Oct, greatest because June 2023

Better credit costs, more powerful diesel need stimulated higher activity - analyst

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

manufacturers made use of 77% of their total operable capability in October, the highest considering that July 2024, the data revealed. Biodiesel plant usage rose to 89%, the highest because June 2023.

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

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

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as many brand-new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pressed eco-friendly 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 increased mainly by a surge in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

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

Margins were likewise helped by more powerful demand for diesel, which hit a 1 year high in October, raising rates for both the traditional 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 rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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