China s Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu


SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are seeking brand-new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.


The EU will enforce provisional anti-dumping responsibilities of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that deserved $2.3 billion last year.


Some bigger producers are eyeing the marine fuel market in China and Singapore, the world's top marine fuel hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.


Exports to the bloc have fallen greatly because mid-2023 amid examinations. Volumes in the very first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese custom-mades data revealed.


June deliveries shrank to simply over 50,000 loads, the most affordable given that mid-2019, according to custom-mades data.


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


Chinese manufacturers of biodiesel have taken pleasure in fat revenues in current years, making the most of the EU's green energy policy that gives aids to companies that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.


A number of China's biodiesel producers are privately-run little plants utilizing ratings of workers processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.


However, the boom was temporary. The EU began in August last year investigating Indonesian biodiesel that was presumed of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and undercutting regional producers.


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


"With large prices of UCO partly supported by strong U.S. and European need, and free-falling product costs, companies are having a tough time enduring," said Gary Shan, chief marketing officer of Henan Junheng.


Prices of hydrotreated veggie oil, or HVO, a kind of biodiesel, have actually cut in half versus in 2015's average to the present $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan added.


With low prices, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability on average in July, below a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.


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


OUTLETS


While numerous 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 consisting of the marine fuel market at home and in the important center of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.


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


Companies would also accelerate preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to reveal an SAF required before the end of 2024.


They have also been hunting for brand-new biodiesel clients 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)