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

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

Better credit rates, stronger diesel demand stimulated 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, assisted by more powerful margins for the biofuels, according to data put together by advisory group AEGIS Hedging.

Renewable made use of 77% of their overall operable capability in October, the greatest because July 2024, the information revealed. Biodiesel plant usage increased to 89%, the highest considering 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 market oversupplied and forcing a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it enjoys much better rewards and can replace diesel completely.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most brand-new biofuel plants opened in the past three years were tailored 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 increased generally by a surge in the worth of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable diesel production, rose 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 likewise helped by stronger demand for diesel, which struck a 1 year high in October, raising costs for both the traditional 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the right direction in October," Capozzola stated. (Reporting by Shariq Khan in New York