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

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

Better credit prices, more powerful diesel demand spurred greater activity - expert

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

Renewable utilized 77% of their overall operable capability in October, the highest because July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the greatest 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 development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers based on federal government incentives such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for providers, as it reaps much better rewards 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 information showed, as a lot of brand-new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pushed eco-friendly 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 enhanced mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 said.

Margins were likewise helped by more powerful need for diesel, which struck an one-year high in October, raising costs for both the standard 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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