Renewable diesel manufacturers utilization at 77%, greatest since July - AEGIS

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

Better credit costs, more powerful diesel need spurred greater activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by more powerful margins for the biofuels, according to information compiled by advisory group AEGIS Hedging.

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

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government incentives such as tax credits. Among the 2, eco-friendly diesel has emerged as the favored fuel for suppliers, as it enjoys better incentives and can substitute 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 capacity 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 past three years were geared towards it.

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

In addition to plant closures, success for the industry in October was enhanced primarily by a rise in the worth of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, rose 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 assisted by stronger need for diesel, which hit an one-year high in October, raising rates 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 really had whatever rowing in the right instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)