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

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

Better credit costs, 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 stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

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

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

Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually become the favored fuel for providers, as it gains much better rewards and can substitute diesel totally.

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 capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many brand-new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pressed renewable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the market in October was improved generally by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released 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 assisted by more powerful need for diesel, which struck 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., also 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 best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York