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

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

Better credit rates, stronger diesel demand stimulated higher activity - analyst

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

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

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making providers reliant on government incentives such as tax credits. Among the 2, sustainable diesel has become the for providers, as it enjoys better rewards and can replace diesel totally.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information launched by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed renewable 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 increased mainly by a surge in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable 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, enhancing success for making the fuels, Capozzola stated.

Margins were likewise helped by more powerful need for diesel, which hit an one-year high in October, raising rates for both the standard 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 below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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