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

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

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

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

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

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

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers based on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it gains 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 data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many new biofuel plants opened in the past three years were geared 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 industry in October was boosted mainly by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were also helped by stronger need for diesel, which hit an one-year high in October, raising rates for both the conventional 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)