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

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

Better credit rates, more powerful diesel demand spurred greater activity - analyst

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

Renewable diesel manufacturers used 77% of their overall operable capability in October, the highest since July 2024, the information revealed. Biodiesel plant usage rose to 89%, the greatest because June 2023.

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

Both sustainable diesel and biodiesel are more costly to produce than diesel, making suppliers based on federal government rewards such as . Among the 2, eco-friendly diesel has actually become the preferred fuel for suppliers, as it reaps much better rewards and can substitute diesel completely.

Total biodiesel production capability 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 revealed, as the majority of new biofuel plants opened in the previous 3 years were tailored towards it.

Still, oversupply pushed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the industry in October was boosted generally by a rise in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of sustainable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and eco-friendly 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 more powerful demand 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., likewise rose from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You truly had everything rowing in the best instructions in October," Capozzola stated. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)