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

Biodiesel manufacturers usage rate hit 89% in Oct, greatest because June 2023

Better credit rates, stronger diesel need stimulated greater activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up 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 total operable capacity in October, the greatest considering that July 2024, the data . Biodiesel plant usage increased to 89%, the highest since June 2023.

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

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers dependent on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it gains better rewards and can replace diesel entirely.

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% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pressed sustainable diesel output capacity 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 improved primarily by a surge in the worth of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving success 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 alternatives, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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