Renewable diesel producers utilization at 77%, greatest because July - AEGIS

Biodiesel producers usage rate hit 89% in Oct, highest given that June 2023

Better credit costs, stronger diesel demand spurred higher activity - expert

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

Renewable diesel producers utilized 77% of their overall operable capacity in October, the highest since July 2024, the data revealed. Biodiesel plant usage increased to 89%, the highest given that June 2023.

Rising usage rates and improving 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 variety of biodiesel plant closures.

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

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 increased almost 19% year-over-year to 4.58 billion gallons in October, the EIA information revealed, as a lot of new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pressed 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 market in October was boosted generally by a surge 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, provided for biodiesel and renewable 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 said.

Margins were also helped by stronger need for diesel, which struck an one-year high in October, raising rates for both the conventional fuel and its alternatives, he said.

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