China’s Biodiesel Producers Seek Brand-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 checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.

The EU will enforce provisional anti-dumping tasks 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 business that was worth $2.3 billion last year.

Some larger producers are eyeing the marine fuel market in China and Singapore, the world’s leading marine fuel hub, as they seek to balance out currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen greatly since mid-2023 . Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 loads, Chinese customizeds information revealed.

June shipments shrank to simply over 50,000 lots, the most affordable because mid-2019, according to custom-mades data.

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

Chinese manufacturers of biodiesel have actually enjoyed fat earnings in the last few 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 producers are privately-run small plants employing ratings of workers processing waste oil collected from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.

However, the boom was temporary. The EU began in August in 2015 investigating Indonesian biodiesel that was thought of preventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and undercutting regional producers.

Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), raising prices of the feedstock, while costs of biodiesel sank in view of shrinking demand for the Chinese supply.

„With large prices of UCO partially supported by strong U.S. and European demand, and free-falling item prices, business are having a bumpy ride making it through,” said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main type 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 capacity 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 boosting China’s UCO exports, which experts forecast 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 heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While lots of smaller plants are likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market at home and in the important center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

One of the manufacturers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would also speed up planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF mandate before the end of 2024.

They have actually likewise been scouting 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)