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

Biodiesel producers usage rate struck 89% in Oct, greatest considering that June 2023

Better credit rates, stronger diesel demand spurred higher activity - analyst

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

Renewable diesel manufacturers made use of 77% of their total operable capability in October, the highest because July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

Rising utilization rates and improving margins are a welcome relief for the biofuels industry, 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 costly to produce than diesel, making suppliers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has become the favored fuel for providers, as it reaps much better rewards and can substitute diesel completely.

Total biodiesel production capacity 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 capability increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as the majority of brand-new biofuel plants opened in the previous three years were geared 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, success for the market in October was enhanced generally by a rise 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, provided for biodiesel and eco-friendly diesel production, rose 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 demand for diesel, which struck a 1 year high in October, raising costs for both the traditional 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had everything rowing in the right instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; by David Gregorio)