Renewable diesel producers utilization at 77%, greatest considering that July - AEGIS

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

Better credit costs, stronger diesel need stimulated greater activity - expert

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data compiled by advisory group AEGIS Hedging.

Renewable diesel producers used 77% of their overall operable capability in October, the greatest since July 2024, the information revealed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

Rising utilization rates and enhancing margins are a welcome relief for the biofuels industry, after operators sustained a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and requiring 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 emerged as the preferred fuel for providers, as it gains much 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 data 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 a lot of 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 increased mainly by a surge in the value of credits required for compliance with federal biofuel requireds, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and eco-friendly 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 said.

Margins were also assisted by stronger need for diesel, which struck a 1 year high in October, raising prices for both the traditional fuel and its options, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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