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

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

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

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest because July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest considering that June 2023.

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it enjoys much better rewards and can substitute diesel totally.

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

Renewable diesel output capacity increased almost 19% to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the past 3 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, profitability for the market in October was improved mainly by a rise in the value of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable 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 said.

Margins were also helped by more powerful need for diesel, which struck a 1 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You actually had whatever rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City