Renewable diesel usage at 77%, greatest because July - AEGIS

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

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

NEW YORK CITY, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers increase 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 manufacturers utilized 77% of their overall operable capacity in October, the highest because July 2024, the data showed. Biodiesel plant utilization rose to 89%, the greatest because June 2023.

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

Both eco-friendly diesel and biodiesel are more pricey to produce than diesel, making suppliers depending on government rewards such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for providers, as it enjoys much better rewards and can substitute diesel completely.

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 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 eco-friendly 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 enhanced mainly by a surge in the value of credits needed for compliance with federal biofuel mandates, stated Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly diesel production, rose from a low of 56 cents each in September to over 71 cents in October, enhancing profitability for making the fuels, Capozzola stated.

Margins were also assisted by stronger demand for diesel, which hit a 1 year high in October, raising prices for both the traditional fuel and its options, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

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