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

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

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

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

Renewable diesel manufacturers made use of 77% of their total operable capacity in October, the highest considering that July 2024, the data revealed. Biodiesel plant utilization rose to 89%, the highest because June 2023.

Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators endured 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 dependent on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has actually become the preferred fuel for providers, as it reaps much 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 information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many new biofuel plants opened in the past 3 years were geared towards it.

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

In addition to plant closures, success for the industry in October was improved generally by a rise in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, issued 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 also helped by stronger need for diesel, which struck a 1 year high in October, raising rates for both the traditional 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., likewise increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had everything rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)