China’s Biodiesel Producers Seek Brand-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 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 provisionary anti-dumping responsibilities of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that was worth $2.3 billion in 2015.

Some larger producers are considering 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 fallen greatly considering that mid-2023 amidst investigations. Volumes in the first six months of this year plunged 51% from a year earlier to 567,440 lots, Chinese customizeds information revealed.

June deliveries shrank to just over 50,000 lots, the most affordable given 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 deliveries to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

Chinese producers of biodiesel have actually delighted in fat revenues over the last few 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.

Many of China’s biodiesel manufacturers are privately-run small plants employing ratings of workers processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.

However, the boom was short-term. The EU began in August in 2015 investigating Indonesian biodiesel that was suspected of circumventing 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 manufacturers.

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

“With significant rates of UCO partly supported by strong U.S. and European demand, and free-falling item costs, companies are having a difficult time enduring,” stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a main kind of biodiesel, have halved versus last year’s average to the current $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan included.

With low rates, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity typically 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 improving China’s UCO exports, which analysts predict 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 top destinations.

OUTLETS

While many smaller plants are most likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market in your home and in the essential 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 utilize more biodiesel in marine fuel.

Companies would likewise speed up preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to announce an SAF required before the end of 2024.

They have also been searching for brand-new biodiesel clients outside the EU bloc, in Australia, Japan, and Southeast Asia where there are local mandates for the alternative fuel, the authorities included.

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