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

Biodiesel producers usage rate hit 89% in Oct, greatest considering that June 2023

Better credit prices, 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 more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel producers utilized 77% of their total operable capacity in October, the greatest since July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the highest considering that June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers reliant on government incentives such as tax credits. Among the 2, renewable diesel has become the preferred fuel for suppliers, as it reaps better incentives and can replace diesel completely.

Total biodiesel production capacity 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.

output capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pushed renewable 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 generally by a rise in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly diesel production, increased 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 assisted by stronger need for diesel, which struck an one-year high in October, raising rates for both the traditional fuel and its options, he stated.

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

“You really had everything rowing in the best instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York