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

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

Better credit costs, more powerful diesel need spurred higher activity - expert

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

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

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

Both sustainable diesel and biodiesel are more expensive to produce than diesel, making providers based on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for suppliers, as it reaps much better incentives and can replace diesel totally.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to data 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 most new biofuel plants opened in the previous 3 years were geared towards it.

Still, oversupply pushed 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 industry in October was improved primarily by a rise 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, issued for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving success for making the fuels, Capozzola said.

Margins were likewise helped by more powerful need for diesel, which struck an one-year high in October, raising costs 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 really had whatever rowing in the ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York; Editing by David Gregorio)