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

Biodiesel producers utilization rate struck 89% in Oct, highest because June 2023

Better credit costs, stronger diesel demand stimulated greater activity - expert

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

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the highest because July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest considering that June 2023.

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

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers dependent on government incentives such as tax credits. Among the 2, renewable diesel has become the preferred fuel for providers, as it gains better incentives and can replace 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 information revealed, as many new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pressed 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 industry in October was increased mainly by a surge 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, issued for biodiesel and sustainable 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 stated.

Margins were likewise assisted by stronger demand for diesel, which struck an one-year high in October, raising prices for both the conventional 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 actually had whatever rowing in the best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)