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

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

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

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

Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the greatest because July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

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

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for suppliers, as it enjoys 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 rose 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 previous three years were geared towards it.

Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the market in October was enhanced primarily by a surge in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued 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 said.

Margins were likewise assisted by stronger need for diesel, which struck an one-year high in October, raising rates 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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