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

Biodiesel producers usage rate hit 89% in Oct, highest because June 2023

Better credit costs, more powerful diesel need spurred higher activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the greatest given that July 2024, the data revealed. Biodiesel plant utilization rose 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 marketplace oversupplied and forcing a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers dependent on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually emerged as the favored fuel for suppliers, as it gains better incentives 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 a lot of brand-new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed 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 boosted primarily by a surge in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

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

Margins were likewise helped by stronger need for diesel, which hit a 1 year high in October, raising costs 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had everything rowing in the best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)