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

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

Better credit rates, more powerful diesel demand spurred higher activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers used 77% of their total operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest considering that June 2023.

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

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers dependent on federal government incentives such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for suppliers, as it reaps much better rewards and can replace 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 capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pushed eco-friendly diesel output capacity 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 enhanced mainly by a surge in the value of credits required for compliance with federal biofuel requireds, 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 also helped by more powerful demand for diesel, which hit a 1 year high in October, raising prices for both the conventional 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 increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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