Renewable diesel producers utilization at 77%, highest because July - AEGIS

Biodiesel manufacturers usage rate struck 89% in Oct, greatest because June 2023

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

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

Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the greatest considering that July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest given that 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 need growth slowed, leaving the marketplace oversupplied and forcing a variety of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, renewable diesel has become the favored fuel for providers, as it gains better rewards 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 launched 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 showed, as many brand-new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pressed sustainable 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 improved generally by a surge in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided 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 stated.

Margins were also assisted by stronger demand for diesel, which hit an one-year high in October, raising prices for both the conventional 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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)