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 most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.


The EU will impose provisionary anti-dumping responsibilities of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business 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 bigger producers are considering the marine fuel market in China and Singapore, the world's top marine fuel center, as they seek to offset currently falling biodiesel exports to the EU, biofuel executives said.


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


June shipments shrank to just over 50,000 loads, the most affordable because mid-2019, according to customizeds 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, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese custom-mades figures showed.


Chinese producers of biodiesel have actually enjoyed fat revenues in the last few years, taking advantage of the EU's green energy policy that gives aids to business that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.


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


However, the boom was brief. The EU started in August in 2015 examining Indonesian biodiesel that was thought of circumventing 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 local manufacturers.


Anticipating the tariffs, traders stockpiled on utilized cooking oil (UCO), raising rates of the feedstock, while rates 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 demand, and free-falling product costs, business are having a bumpy ride making it through," stated Gary Shan, primary marketing officer of Henan Junheng.


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


With low prices, 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, shrinking biodiesel sales are boosting China's UCO exports, which analysts forecast are set to touch a 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 leading locations.


OUTLETS


While many smaller plants are likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Zhuoyue are checking out new outlets consisting of the marine fuel market at home and in the crucial hub of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.


Among the manufacturers, Longyan Zhuoyue, concurred 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 said. China is anticipated to announce an SAF required before the end of 2024.


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


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