Renewable diesel producers usage at 77%, highest since July - AEGIS

Biodiesel manufacturers utilization rate hit 89% in Oct, highest given that June 2023

Better credit prices, stronger diesel need spurred greater activity - analyst

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

Renewable diesel producers made use of 77% of their total operable capability in October, the greatest because July 2024, the data revealed. Biodiesel plant usage increased to 89%, the greatest given that June 2023.

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

Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making providers reliant on federal government incentives such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for providers, as it reaps 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 data launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capability rose almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as most new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pushed sustainable 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 generally by a rise in the value of credits required for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, provided for biodiesel and sustainable 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 stated.

Margins were also helped by more powerful need for diesel, which hit a 1 year high in October, raising prices 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had everything rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York; Editing by David Gregorio)