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

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

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

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

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

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

Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers reliant on government incentives such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for providers, as it enjoys much better incentives 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 revealed, as most new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed eco-friendly diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the industry in October was increased mainly 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, issued for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were likewise helped by more powerful need for diesel, which hit a 1 year high in October, raising rates 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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had everything rowing in the best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)