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

Biodiesel manufacturers utilization rate hit 89% in Oct, greatest given that June 2023

Better credit prices, stronger diesel need spurred greater activity - expert

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest considering that July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

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

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it reaps much better rewards and can substitute diesel totally.

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 brand-new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pushed renewable 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 boosted mainly by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were likewise helped by more powerful need for diesel, which hit a 1 year high in October, raising rates for both the traditional 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., also rose 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 ideal instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)