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

By Chen Aizhu


SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are looking for 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 experts said.


The EU will impose provisionary anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization 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 balance out already falling biodiesel exports to the EU, biofuel executives stated.


Exports to the bloc have actually fallen dramatically since mid-2023 amid investigations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 lots, Chinese custom-mades information showed.


June deliveries shrank to just over 50,000 heaps, the lowest since mid-2019, according to customs information.


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


Chinese manufacturers of biodiesel have actually taken pleasure in fat profits in recent years, taking advantage of the EU's green energy policy that gives subsidies to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.


A number of China's biodiesel manufacturers are privately-run little plants using scores of workers processing waste oil gathered 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 started in August in 2015 investigating Indonesian biodiesel that was believed of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and damaging local producers.


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


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


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


With low costs, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity usually in July, down from 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 soared by two-thirds year-on-year in the very first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the leading locations.


OUTLETS


While lots of smaller sized plants are likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new of the marine fuel market in the house and in the essential hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.


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


Companies would likewise speed up planning and structure of sustainable aviation fuel (SAF) plants, executives said. China is expected to announce an SAF mandate before completion 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 mandates for the alternative fuel, the officials included.


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