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

Biodiesel manufacturers utilization rate struck 89% in Oct, highest considering that June 2023

Better credit rates, more powerful diesel need spurred greater activity - analyst

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

Renewable diesel manufacturers made use of 77% of their overall operable capability in October, the greatest considering that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.

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

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers dependent on federal government incentives such as tax credits. Among the 2, renewable diesel has emerged as the favored fuel for providers, as it reaps 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 data released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed renewable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the market in October was improved mainly by a rise 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, provided 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 also assisted by more powerful need for diesel, which struck an one-year high in October, raising rates for both the traditional fuel and its alternatives, he stated.

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

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