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

Biodiesel producers usage rate struck 89% in Oct, greatest considering that June 2023

Better credit rates, more powerful diesel need stimulated greater activity - expert

NEW YORK CITY, 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 data assembled by advisory group AEGIS Hedging.

Renewable diesel manufacturers made use of 77% of their overall operable capacity in October, the highest considering that July 2024, the information showed. Biodiesel plant usage rose to 89%, the greatest given that June 2023.

Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as demand development slowed, leaving the market oversupplied and forcing 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, sustainable diesel has become the favored fuel for suppliers, as it enjoys better rewards and can substitute 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 capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as most brand-new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pushed eco-friendly diesel output capacity 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 enhanced primarily by a surge in the worth of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, increased 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 assisted by more powerful need for diesel, which hit 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., also increased from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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