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

Biodiesel producers usage rate hit 89% in Oct, highest because June 2023

Better credit rates, more powerful diesel demand stimulated greater activity - expert

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

Renewable diesel manufacturers used 77% of their total operable capacity in October, the highest given that July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the greatest given that June 2023.

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

Both renewable diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it reaps much better rewards and can substitute diesel entirely.

Total biodiesel production 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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as a lot of brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed sustainable 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 increased generally by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.

Margins were also helped by more powerful demand for diesel, which struck an one-year high in October, raising rates for both the traditional fuel and its options, 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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