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

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

Better credit rates, more powerful diesel need stimulated greater activity - expert

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

Renewable diesel manufacturers utilized 77% of their total operable capability in October, the highest considering that July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest since June 2023.

Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers reliant on government incentives 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 replace diesel totally.

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 capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many new biofuel plants opened in the previous 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, success for the industry in October was increased mainly by a rise in the value of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose 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 also assisted by stronger demand for diesel, which struck an one-year high in October, raising prices for both the standard 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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