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

Biodiesel producers utilization rate hit 89% in Oct, greatest because June 2023

Better credit prices, more powerful diesel need stimulated higher activity - analyst

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

Renewable diesel manufacturers used 77% of their total operable capability in October, the greatest considering that July 2024, the information showed. Biodiesel plant usage increased to 89%, the highest given that June 2023.

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

Both renewable diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, diesel has emerged as the preferred fuel for providers, as it reaps better incentives and can replace diesel totally.

Total biodiesel production capacity 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 almost 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as most new biofuel plants opened in the previous three years were geared 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, profitability for the industry in October was increased generally by a rise in the value of credits required for compliance with federal biofuel mandates, said 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 likewise assisted by stronger need for diesel, which hit a 1 year high in October, raising rates for both the traditional 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 rose 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 ideal direction in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)