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

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

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

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

Renewable diesel manufacturers made use of 77% of their total operable capability in October, the highest since July 2024, the data revealed. Biodiesel plant utilization increased to 89%, the highest considering that June 2023.

Rising usage rates and improving margins are a welcome relief for the biofuels industry, after operators withstood a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, renewable diesel has actually become the preferred fuel for providers, as it enjoys better rewards and can substitute 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 nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as a lot of brand-new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pressed eco-friendly diesel output capability 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 generally by a rise in the value of credits needed for compliance with mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided 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 stronger need for diesel, which hit a 1 year high in October, raising costs 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., likewise rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You actually had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York