Renewable diesel producers usage at 77%, greatest considering that July - AEGIS

Biodiesel manufacturers usage rate hit 89% in Oct, greatest because June 2023

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

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

Renewable diesel producers utilized 77% of their total operable capability in October, the greatest because July 2024, the information showed. Biodiesel plant utilization increased to 89%, the highest since June 2023.

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

Both eco-friendly diesel and biodiesel are more costly to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for providers, as it gains better rewards and can replace diesel completely.

Total biodiesel production capacity 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 showed, as a lot of new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pushed renewable diesel output capacity 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 increased mainly by a surge in the worth of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were also helped by more powerful need for diesel, which struck a 1 year high in October, raising prices for both the traditional fuel and its options, 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 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 said. (Reporting by Shariq Khan in New York City