Renewable diesel producers utilization at 77%, highest since July - AEGIS

Biodiesel producers utilization rate struck 89% in Oct, greatest since June 2023

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

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

Renewable diesel manufacturers utilized 77% of their overall in October, the highest considering that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest because 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 market oversupplied and requiring a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers dependent on government rewards such as tax credits. Among the 2, eco-friendly diesel has actually become the preferred fuel for providers, as it reaps much better incentives and can substitute diesel entirely.

Total biodiesel production capability 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 capability increased nearly 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 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 improved primarily by a rise in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

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

Margins were also helped by stronger need for diesel, which hit a 1 year high in October, raising costs 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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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