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

Biodiesel producers utilization rate hit 89% in Oct, highest since June 2023

Better credit prices, stronger diesel need spurred greater activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers 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 manufacturers used 77% of their total operable capability in October, the highest since July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest since June 2023.

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

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making suppliers dependent on federal government rewards such as tax credits. Among the 2, renewable diesel has actually emerged as the favored fuel for providers, as it gains much better rewards and can replace diesel totally.

Total biodiesel production capability 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 increased almost 19% year-over-year to 4.58 billion gallons in October, the revealed, as a lot of new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pressed sustainable diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the market in October was enhanced mainly by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided 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 assisted by more powerful need for diesel, which hit an one-year high in October, raising rates for both the conventional 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., 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 City