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

Biodiesel producers usage rate struck 89% in Oct, highest given that June 2023

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

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers ramped up 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 producers utilized 77% of their overall operable capacity in October, the highest since July 2024, the data showed. Biodiesel plant usage increased to 89%, the greatest considering that June 2023.

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

Both renewable diesel and biodiesel are more pricey to produce than diesel, making providers depending on government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the preferred fuel for suppliers, as it gains better rewards and can substitute diesel totally.

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 capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as a lot of brand-new biofuel plants opened in the past 3 years were tailored towards it.

Still, oversupply pressed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, profitability for the market in October was boosted generally by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable 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, improving profitability for making the fuels, Capozzola stated.

Margins were also helped by more powerful demand for diesel, which hit a 1 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 truly had whatever rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)