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

Biodiesel manufacturers usage rate struck 89% in Oct, greatest given that June 2023

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

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up operations in October to multi-month highs, helped 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 capacity in October, the highest because July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest because June 2023.

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

Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, renewable diesel has become the preferred fuel for suppliers, as it gains much better incentives and can replace diesel totally.

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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pushed sustainable diesel output capacity 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 improved generally by a surge in the worth of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and sustainable diesel production, rose 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 assisted by more powerful demand for diesel, which struck a 1 year high in October, raising costs for both the conventional fuel and its options, he stated.

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