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

Biodiesel producers utilization rate struck 89% in Oct, greatest since June 2023

Better credit prices, stronger diesel need spurred greater activity - analyst

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

Renewable diesel manufacturers utilized 77% of their total operable capability in October, the highest since July 2024, the data showed. Biodiesel plant usage rose to 89%, the highest given that June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, sustainable diesel has actually become the preferred fuel for suppliers, as it gains better rewards and can substitute 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 increased 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 previous three years were tailored towards it.

Still, oversupply pressed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the market in October was enhanced generally by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, rose 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 likewise helped by more powerful demand for diesel, which hit a 1 year high in October, raising rates 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., likewise from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had whatever rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York