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

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

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

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted 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 capacity in October, the highest considering that July 2024, the data revealed. Biodiesel plant utilization rose 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 growth slowed, leaving the market oversupplied and requiring a variety of biodiesel plant closures.

Both renewable diesel and biodiesel are more costly to produce than diesel, making providers dependent on government rewards such as tax credits. Among the 2, sustainable diesel has become the preferred fuel for suppliers, as it reaps better rewards and can substitute 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 capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pressed 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 increased mainly by a surge in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly 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 stated.

Margins were also assisted by more powerful demand for diesel, which hit an one-year high in October, raising costs for both the traditional 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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