Renewable diesel manufacturers utilization at 77%, highest considering that July - AEGIS

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

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

NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 77% of their total operable capability in October, the highest considering that July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the highest given that June 2023.

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

Both renewable 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 actually become the favored fuel for suppliers, 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 released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as a lot of new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pushed sustainable 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 improved generally by a rise in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of renewable fuels at AEGIS.

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

Margins were likewise assisted by stronger demand for diesel, which struck a 1 year high in October, raising prices 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 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 right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City