Renewable diesel producers usage at 77%, highest given that July - AEGIS

Biodiesel manufacturers utilization rate struck 89% in Oct, greatest considering that June 2023

Better credit prices, stronger 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, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

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

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

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers based on government rewards such as tax credits. Among the 2, renewable diesel has emerged as the preferred fuel for providers, as it reaps much better incentives and can substitute diesel entirely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information 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 data revealed, as the majority of brand-new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pushed renewable diesel output capability 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 boosted generally by a rise in the worth of credits required for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable 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 profitability for making the fuels, Capozzola said.

Margins were likewise helped by more powerful demand for diesel, which struck a 1 year high in October, raising rates for both the conventional fuel and its alternatives, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are 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 ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City