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

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

Better credit rates, stronger diesel need spurred higher activity - analyst

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

Renewable diesel producers made use of 77% of their overall operable capacity in October, the highest since July 2024, the information revealed. Biodiesel plant utilization increased to 89%, the highest because June 2023.

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

Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, renewable diesel has become the preferred fuel for suppliers, as it gains better incentives and can replace 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 increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pressed eco-friendly 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 increased generally by a surge in the worth of credits required for compliance with requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 stated.

Margins were also assisted by more powerful need for diesel, which struck an one-year high in October, raising costs for both the standard 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 increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the best direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City