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

Biodiesel manufacturers usage rate hit 89% in Oct, greatest since June 2023

Better credit rates, stronger diesel need stimulated greater activity - analyst

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

Renewable diesel producers utilized 77% of their overall operable capability in October, the highest considering that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest given that June 2023.

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

Both sustainable diesel and are more costly to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, renewable diesel has emerged as the favored fuel for suppliers, as it gains much better incentives and can substitute diesel completely.

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 capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of brand-new biofuel plants opened in the past three years were geared towards it.

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

In addition to plant closures, success for the industry in October was improved primarily by a surge in the value of credits needed 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, increased 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 struck an one-year high in October, raising prices for both the standard fuel and its options, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You truly had whatever rowing in the ideal instructions in October,” Capozzola stated. (Reporting by Shariq Khan in New York