Renewable diesel manufacturers utilization at 77%, greatest because July - AEGIS

Biodiesel producers utilization rate hit 89% in Oct, highest considering that June 2023

Better credit costs, more powerful diesel need stimulated greater activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, assisted by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel producers used 77% of their total operable capability in October, the highest because July 2024, the data showed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the preferred fuel for suppliers, as it gains 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 released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as a lot of brand-new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pressed renewable 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 increased mainly by a rise in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released 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 stated.

Margins were also assisted by stronger need for diesel, which struck an one-year high in October, raising costs for both the conventional 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., also increased 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 instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City; by David Gregorio)