Renewable diesel manufacturers usage at 77%, greatest considering that July - AEGIS

Biodiesel manufacturers usage rate struck 89% in Oct, highest since June 2023

Better credit costs, more powerful diesel demand stimulated higher activity - analyst

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

Renewable diesel manufacturers utilized 77% of their total operable capability in October, the highest since July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest considering that 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 development slowed, leaving the marketplace oversupplied and requiring a number of biodiesel plant closures.

Both sustainable diesel and biodiesel are more pricey to produce than diesel, making suppliers based on government incentives such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for suppliers, as it gains better incentives and can replace diesel completely.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information 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 data showed, as the majority of new biofuel plants opened in the previous three years were tailored towards it.

Still, oversupply pressed sustainable 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 improved primarily by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued 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 likewise helped by stronger need for diesel, which struck an one-year high in October, raising rates 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., 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