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

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

Better credit rates, more powerful diesel need spurred greater activity - analyst

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the highest since July 2024, the data showed. Biodiesel plant usage increased to 89%, the highest since 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 number of biodiesel plant closures.

Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for providers, as it gains better incentives and can substitute diesel completely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to data 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 revealed, as the majority of brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pressed renewable 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 increased primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly 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 said.

Margins were likewise helped by more powerful need for diesel, which struck a 1 year high in October, raising rates for both the standard fuel and its alternatives, 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 listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You actually had whatever rowing in the right instructions in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)