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

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

Better credit prices, more powerful diesel demand stimulated higher activity - expert

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up 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 producers used 77% of their overall operable capability in October, the highest given that July 2024, the information revealed. Biodiesel plant utilization rose 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 development slowed, leaving the marketplace oversupplied and requiring a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, sustainable diesel has actually emerged as the favored fuel for suppliers, as it gains much better incentives and can replace diesel completely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to data 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 data revealed, as most brand-new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pushed eco-friendly diesel output 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 mainly by a rise in the value of credits needed for compliance with federal biofuel requireds, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.

Margins were likewise helped by stronger 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 increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the right instructions in October,” Capozzola said. (Reporting by Shariq Khan in New York