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

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

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

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

Renewable diesel manufacturers made use of 77% of their total operable capacity in October, the greatest considering that July 2024, the information 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 market, after operators withstood a rough start to 2024 as need development slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers reliant on federal government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it enjoys much better incentives and can substitute diesel completely.

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

Renewable diesel output capacity rose almost 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 past 3 years were tailored towards it.

Still, oversupply pushed sustainable diesel output capability 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 boosted mainly by a rise in the value of credits needed for compliance with federal biofuel requireds, stated 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 success for making the fuels, Capozzola said.

Margins were likewise helped by more powerful need for diesel, which struck an one-year high in October, raising prices for both the conventional fuel and its alternatives, 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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