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

Biodiesel manufacturers utilization rate hit 89% in Oct, highest given that June 2023

Better credit prices, more powerful diesel need spurred higher activity - expert

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers 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 overall operable capability in October, the highest given that July 2024, the data showed. Biodiesel plant utilization increased to 89%, the greatest since June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers dependent on government incentives such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the favored fuel for providers, as it gains better incentives and can replace diesel totally.

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 capability increased nearly 19% to 4.58 billion gallons in October, the EIA data revealed, as most new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed renewable diesel output capacity 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 improved generally by a rise in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly 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 profitability for making the fuels, Capozzola said.

Margins were likewise assisted by stronger demand for diesel, which struck a 1 year high in October, raising costs for both the traditional fuel and its options, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)