Renewable diesel manufacturers usage at 77%, greatest since July - AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, highest considering that June 2023

Better credit prices, more powerful diesel demand stimulated higher activity - expert

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

Renewable diesel manufacturers used 77% of their overall operable capability in October, the highest because July 2024, the information revealed. Biodiesel plant usage increased to 89%, the greatest because June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers dependent on federal government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it reaps better rewards 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 launched 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 information showed, as the majority of brand-new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pressed sustainable diesel output capability 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 increased mainly by a rise in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued 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 likewise assisted by stronger demand for diesel, which struck a 1 year high in October, raising prices for both the standard fuel and its options, 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 truly had whatever rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)