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

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

Better credit prices, 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 stronger margins for the biofuels, according to information assembled by advisory group AEGIS Hedging.

Renewable diesel producers utilized 77% of their total operable capacity in October, the highest since July 2024, the data revealed. Biodiesel plant usage rose to 89%, the greatest because June 2023.

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

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

Renewable diesel output capability rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of brand-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, profitability for the market in October was boosted primarily by a surge in the value of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable 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, enhancing success for making the fuels, Capozzola stated.

Margins were also helped by more powerful need for diesel, which hit an one-year high in October, raising costs 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 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 whatever rowing in the ideal instructions in October," Capozzola said. (Reporting by Shariq Khan in New York City