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

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

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

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase 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 manufacturers used 77% of their total operable capacity in October, the greatest considering that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest since June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers based on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it enjoys much better incentives and can replace diesel totally.

Total biodiesel production capacity 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 increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of brand-new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pressed eco-friendly 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 boosted primarily by a surge 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, improving profitability for making the fuels, Capozzola said.

Margins were also assisted by more powerful need for diesel, which hit a 1 year high in October, raising prices for both the standard fuel and its alternatives, he said.

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 ideal instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York