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

Biodiesel manufacturers utilization rate struck 89% in Oct, highest since June 2023

Better credit prices, more powerful diesel demand spurred higher activity - analyst

NEW YORK CITY, 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 data assembled by advisory group AEGIS Hedging.

Renewable diesel producers used 77% of their total operable capability in October, the highest because July 2024, the information revealed. Biodiesel plant usage increased to 89%, the highest given that June 2023.

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

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

Total biodiesel production capability 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed diesel output capacity 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 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, issued for biodiesel and sustainable diesel production, increased 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 stronger demand for diesel, which hit an one-year high in October, raising costs 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., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You actually had whatever rowing in the ideal direction in October,” Capozzola said. (Reporting by Shariq Khan in New York