Renewable diesel manufacturers usage at 77%, greatest considering that July - AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, highest since June 2023

Better credit rates, stronger diesel demand stimulated greater activity - expert

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

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

Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on rewards such as tax credits. Among the 2, eco-friendly diesel has become the favored fuel for suppliers, as it enjoys 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 increased almost 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 three years were tailored towards it.

Still, oversupply pushed 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 market in October was boosted generally by a rise 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 eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola said.

Margins were also assisted by stronger demand for diesel, which struck a 1 year high in October, raising rates for both the standard fuel and its alternatives, 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 actually had whatever rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)