Renewable diesel producers utilization at 77%, greatest considering that July - AEGIS

Biodiesel producers utilization rate struck 89% in Oct, greatest given that June 2023

Better credit costs, stronger diesel need stimulated higher activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers ramped up 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 producers utilized 77% of their overall operable capacity in October, the greatest because July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the highest given that June 2023.

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has actually emerged as the preferred fuel for suppliers, as it gains much better incentives and can replace diesel completely.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as a lot of new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pressed eco-friendly diesel output capacity 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 enhanced mainly by a rise in the worth of credits required for compliance with federal biofuel mandates, 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, enhancing profitability for making the fuels, Capozzola stated.

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

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