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

Biodiesel producers utilization rate struck 89% in Oct, highest considering that June 2023

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

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

Renewable diesel producers used 77% of their overall operable capacity in October, the greatest considering that July 2024, the data revealed. Biodiesel plant usage 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 marketplace oversupplied and requiring a variety of biodiesel plant closures.

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

Total biodiesel production capability 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as the majority of new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pushed renewable 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 enhanced primarily by a surge in the worth of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, provided 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 also helped by stronger need for diesel, which hit a 1 year high in October, raising rates for both the traditional fuel and its alternatives, 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 actually had whatever rowing in the best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)