Renewable diesel producers usage at 77%, greatest given that July - AEGIS

Biodiesel producers utilization rate struck 89% in Oct, greatest given that June 2023

Better credit costs, stronger diesel need spurred greater analyst

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the highest considering that July 2024, the data showed. Biodiesel plant usage rose to 89%, the greatest given that June 2023.

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

Both renewable diesel and biodiesel are more pricey to produce than diesel, making suppliers reliant on federal government rewards such as tax credits. Among the 2, renewable diesel has actually emerged as the favored fuel for providers, as it reaps 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 data released 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 a lot 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 primarily 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, provided for biodiesel and eco-friendly 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 also helped by stronger demand 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 increased 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 ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York