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

Biodiesel manufacturers usage rate struck 89% in Oct, greatest given that June 2023

Better credit rates, stronger diesel demand spurred higher activity - expert

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers increase 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 manufacturers 77% of their total operable capability in October, the greatest since July 2024, the information showed. 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 industry, after operators endured a rough start to 2024 as demand growth slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.

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

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as the majority of new biofuel plants opened in the previous 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 market in October was improved primarily by a surge in the value of credits required for compliance with federal biofuel requireds, said 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, enhancing profitability for making the fuels, Capozzola said.

Margins were likewise assisted by more powerful demand for diesel, which struck a 1 year high in October, raising prices for both the traditional fuel and its options, 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had whatever rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York City