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

Biodiesel manufacturers utilization rate hit 89% in Oct, greatest because June 2023

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

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

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the greatest because July 2024, the information showed. Biodiesel plant usage increased to 89%, the greatest since 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 requiring a variety of biodiesel plant closures.

Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers dependent on federal government incentives such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for providers, as it gains better incentives and can substitute diesel totally.

Total biodiesel production capacity 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 increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA data showed, as a lot of new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pushed 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 enhanced mainly by a rise in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable 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, enhancing profitability for making the fuels, Capozzola stated.

Margins were also helped by for diesel, which struck a 1 year high in October, raising prices for both the standard 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., also increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

“You really had everything rowing in the ideal direction in October,” Capozzola said. (Reporting by Shariq Khan in New York City