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

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

Better credit prices, stronger diesel demand spurred greater activity - expert

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest considering that July 2024, the information showed. Biodiesel plant utilization rose to 89%, the highest considering that June 2023.

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

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making suppliers depending on federal government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it gains better incentives and can replace diesel entirely.

Total biodiesel production capability 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as many brand-new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pressed renewable diesel output capacity 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 primarily by a surge in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

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

Margins were likewise helped by stronger need for diesel, which struck an one-year high in October, raising prices 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., also increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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