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

Biodiesel manufacturers utilization 89% in Oct, greatest since June 2023

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

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

Renewable diesel producers utilized 77% of their overall operable capability in October, the greatest given that July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest given that 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 demand growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more costly to produce than diesel, making suppliers based on federal government rewards such as tax credits. Among the 2, eco-friendly diesel has emerged as the preferred fuel for providers, as it gains much 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 data showed, as a lot of new biofuel plants opened in the past three years were geared 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, profitability for the market in October was boosted mainly by a surge in the worth of credits needed for compliance with federal biofuel requireds, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and renewable 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 helped by more powerful need for diesel, which struck an one-year high in October, raising rates for both the conventional fuel and its alternatives, he said.

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

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