China s Biodiesel Producers Seek New Outlets As Hefty EU Tariffs Bite

By Chen Aizhu


SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their biggest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.


The EU will impose provisional anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that was worth $2.3 billion last year.


Some larger manufacturers are eyeing the marine fuel market in China and Singapore, the world's top marine fuel hub, as they look for to offset already falling biodiesel exports to the EU, biofuel executives said.


Exports to the bloc have actually fallen greatly given that mid-2023 amidst investigations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese customs information revealed.


June deliveries diminished to just over 50,000 loads, the most affordable considering that mid-2019, according to customs data.


At their peak, exports to the EU reached a record 1.8 million lots in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures revealed.


Chinese producers of biodiesel have actually taken pleasure in fat profits over the last few years, making the most of the EU's green energy policy that grants subsidies to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.


A lot of China's biodiesel producers are privately-run small plants employing ratings of workers processing waste oil gathered from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.


However, the boom was short-term. The EU started in August in 2015 examining Indonesian biodiesel that was thought of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and damaging regional producers.


Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising costs of the feedstock, while costs of biodiesel sank in view of shrinking need for the Chinese supply.


"With significant prices of UCO partially supported by strong U.S. and European demand, and free-falling item costs, companies are having a tough time making it through," said Gary Shan, chief marketing officer of Henan Junheng.


Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have actually halved versus last year's average to the existing $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan added.


With low rates, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity usually in July, below a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.


Meanwhile, shrinking biodiesel sales are enhancing China's UCO exports, which experts anticipate are set to touch a brand-new high this year. UCO exports soared by two-thirds year-on-year in the very first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top locations.


OUTLETS


While lots of smaller sized plants are most likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets including the marine fuel market in your home and in the essential hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.


Among the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to utilize more biodiesel in marine fuel.


Companies would also accelerate planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF required before completion of 2024.


They have also been searching for customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local requireds for the alternative fuel, the authorities included.


(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)