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

Biodiesel producers usage rate hit 89% in Oct, greatest because June 2023

Better credit costs, stronger diesel demand spurred greater 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 put together by advisory group AEGIS Hedging.

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

Rising usage rates and improving margins are a welcome relief for the biofuels market, after operators endured a rough start to 2024 as demand 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 suppliers reliant on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the preferred fuel for providers, as it enjoys much better incentives 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 launched 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 showed, as a lot of new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pressed eco-friendly diesel output capability 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 boosted primarily by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly diesel production, rose 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 assisted by more powerful demand for diesel, which hit an one-year high in October, raising prices for both the conventional 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 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