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

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

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

NEW YORK CITY, Jan 3 (Reuters) - U.S. renewable diesel and biodiesel producers increase operations in October to multi-month highs, helped by stronger margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

Renewable diesel manufacturers used 77% of their overall operable capability in October, the greatest given that July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the greatest because 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 demand development slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the preferred fuel for providers, as it reaps better incentives and can replace diesel completely.

Total biodiesel production capability 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 capacity rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of brand-new biofuel plants opened in the past 3 years were geared towards it.

Still, oversupply pressed 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 industry in October was improved primarily by a rise in the value of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly 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 assisted by stronger demand for diesel, which struck an one-year high in October, raising costs for both the conventional fuel and its alternatives, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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