Renewable diesel manufacturers usage at 77%, highest given that July - AEGIS

Biodiesel producers utilization rate hit 89% in Oct, greatest because June 2023

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

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

Renewable diesel producers utilized 77% of their overall operable capacity in October, the greatest considering that July 2024, the data . Biodiesel plant usage rose to 89%, the greatest considering that June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for providers, as it reaps better incentives and can substitute diesel completely.

Total biodiesel production capacity 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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as many brand-new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pressed sustainable diesel output capacity 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 increased mainly by a surge 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 success for making the fuels, Capozzola stated.

Margins were likewise assisted by stronger demand for diesel, which struck a 1 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., likewise rose 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 said. (Reporting by Shariq Khan in New York