Renewable diesel producers utilization at 77%, greatest considering that July - AEGIS

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

Better credit rates, stronger diesel need spurred greater activity - expert

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

Renewable diesel producers utilized 77% of their overall operable capability in October, the greatest 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 industry, after operators sustained a rough start to 2024 as need growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for suppliers, as it reaps better incentives and can replace diesel completely.

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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as most brand-new biofuel plants opened in the previous 3 years were geared 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 enhanced primarily by a surge in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were likewise helped by need for diesel, which hit a 1 year high in October, raising prices for both the traditional 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 rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City