Renewable diesel manufacturers utilization at 77%, highest since July - AEGIS

Biodiesel manufacturers usage rate struck 89% in Oct, highest since June 2023

Better credit rates, stronger diesel demand stimulated greater activity - analyst

NEW YORK CITY, 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 information compiled by advisory group AEGIS Hedging.

Renewable diesel producers made use of 77% of their overall operable capacity in October, the highest because July 2024, the data revealed. Biodiesel plant usage rose to 89%, the highest since June 2023.

Rising usage 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 sustainable diesel and biodiesel are more costly to produce than diesel, making providers reliant on government incentives such as tax credits. Among the 2, renewable diesel has actually emerged as the preferred fuel for suppliers, as it gains much better incentives and can substitute diesel entirely.

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 capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pressed renewable 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 mainly by a rise in the worth of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly 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 success for making the fuels, Capozzola stated.

Margins were also assisted by more powerful demand for diesel, which struck a 1 year high in October, raising costs for both the traditional 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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