Renewable diesel producers usage at 77%, greatest given that July - AEGIS

Biodiesel producers usage rate struck 89% in Oct, greatest since June 2023

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

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers ramped up operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.

Renewable diesel producers made use of 77% of their overall operable capacity in October, the greatest because July 2024, the information revealed. Biodiesel plant usage increased to 89%, the greatest given that 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 need growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and are more pricey to produce than diesel, making providers dependent on federal government rewards such as tax credits. Among the 2, renewable diesel has become the favored fuel for providers, as it enjoys better rewards and can replace 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 the majority of new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed renewable diesel output capacity 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 boosted primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, increased 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 rates for both the standard fuel and its alternatives, he said.

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 whatever rowing in the right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)