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

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

Better credit costs, stronger diesel need stimulated greater activity - expert

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

Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the greatest since July 2024, the data revealed. Biodiesel plant usage increased to 89%, the highest given that 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 marketplace oversupplied and forcing a variety 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, eco-friendly diesel has actually emerged as the favored fuel for suppliers, as it enjoys better incentives and can substitute diesel totally.

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

Renewable diesel output capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most new biofuel plants opened in the previous 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, success for the market in October was enhanced generally by a surge 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, provided 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 also assisted by more powerful demand for diesel, which struck a 1 year high in October, raising rates 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 said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)