Renewable diesel producers utilization at 77%, greatest since July - AEGIS

Biodiesel manufacturers usage rate struck 89% in Oct, highest because June 2023

Better credit costs, stronger diesel demand stimulated greater activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly 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 producers made use of 77% of their total operable capacity in October, the highest because July 2024, the information showed. Biodiesel plant usage 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 development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more expensive to produce than diesel, making providers based on federal government incentives such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for suppliers, as it gains much better rewards and can substitute diesel entirely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity 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 past three years were tailored towards it.

Still, oversupply pushed sustainable capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the industry in October was boosted mainly by a rise in the worth of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and renewable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were also assisted by stronger need for diesel, which hit a 1 year high in October, raising rates 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City