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

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

Better credit costs, stronger diesel demand stimulated higher 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 stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 77% of their total operable capability in October, the greatest since July 2024, the information revealed. Biodiesel plant usage rose to 89%, the greatest considering that June 2023.

Rising utilization 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 market oversupplied and forcing a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has become the favored fuel for providers, as it enjoys much better incentives and can substitute diesel entirely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information released 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 data showed, as the majority of new biofuel plants opened in the previous 3 years were geared 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 boosted generally by a rise in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly 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 stated.

Margins were likewise helped by stronger need for diesel, which struck an one-year high in October, raising costs for both the standard fuel and its options, 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 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 direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)