Renewable diesel manufacturers utilization at 77%, greatest because July - AEGIS

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

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

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly 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 overall operable capability in October, the greatest because July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.

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

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers based on government rewards such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the preferred fuel for providers, as it enjoys much 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 information 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 the majority of brand-new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pushed eco-friendly diesel output capability 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 generally by a rise in the worth 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, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.

Margins were also assisted by stronger need for diesel, which struck a 1 year high in October, raising rates 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., likewise 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 said. (Reporting by Shariq Khan in New York