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

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

Better credit prices, more powerful diesel need spurred greater analyst

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest considering that July 2024, the data revealed. Biodiesel plant usage rose to 89%, the highest given that 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 government incentives such as tax credits. Among the 2, eco-friendly diesel has actually emerged as the favored fuel for suppliers, as it gains better rewards and can replace diesel entirely.

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 rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many 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 market 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 sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were likewise helped by stronger demand for diesel, which struck an one-year high in October, raising prices for both the conventional 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 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