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

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

Better credit costs, more powerful diesel demand spurred greater activity - analyst

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

Renewable diesel manufacturers made use of 77% of their total operable capacity in October, the highest given that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

Rising utilization 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 renewable diesel and biodiesel are more expensive to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for suppliers, as it gains much better rewards and can substitute diesel entirely.

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

Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as the majority of brand-new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pushed 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 industry in October was improved generally by a rise 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, released for biodiesel and sustainable diesel production, rose 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 helped by stronger demand for diesel, which struck an one-year high in October, raising costs 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 rose 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 direction in October," Capozzola said. (Reporting by Shariq Khan in New York