Renewable diesel producers usage at 77%, greatest since July - AEGIS

Biodiesel manufacturers utilization rate struck 89% in Oct, highest given that June 2023

Better credit costs, more powerful diesel demand spurred greater activity - analyst

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

Renewable diesel producers used 77% of their total operable capacity in October, the highest given that July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest since June 2023.

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

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

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most brand-new biofuel plants opened in the past 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 primarily by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

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

Margins were also helped by stronger need for diesel, which hit a 1 year high in October, raising costs for both the standard 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 whatever rowing in the right direction in October,” Capozzola said. (Reporting by Shariq Khan in New York City