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

Biodiesel manufacturers usage rate hit 89% in Oct, highest considering that June 2023

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

NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel manufacturers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to data assembled by advisory group AEGIS Hedging.

Renewable diesel manufacturers utilized 77% of their overall operable capability in October, the highest because July 2024, the data revealed. Biodiesel plant usage increased to 89%, the highest given that 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 sustainable diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government incentives such as tax credits. Among the 2, eco-friendly diesel has become the preferred fuel for suppliers, as it reaps better incentives and can substitute diesel entirely.

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 increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA data revealed, as most new biofuel plants opened in the past three years were tailored towards it.

Still, oversupply pressed sustainable diesel output 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 boosted generally by a rise in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and eco-friendly diesel production, increased 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 helped by stronger need for diesel, which struck an one-year high in October, raising rates for both the conventional 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., also 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 best instructions in October," Capozzola said. (Reporting by Shariq Khan in New York