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 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 impose provisional anti-dumping duties of in 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 that was worth $2.3 billion last year.

Some larger producers are eyeing 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 since mid-2023 amid examinations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customizeds information revealed.

June deliveries shrank to simply 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 loads 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 customs figures showed.

Chinese manufacturers of biodiesel have actually delighted in fat earnings in the last few years, maximizing the EU’s green energy policy that grants aids to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

A lot of China’s biodiesel producers are privately-run little plants utilizing scores of employees processing waste oil gathered from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.

However, the boom was brief. The EU started in August last year investigating Indonesian biodiesel that was presumed of circumventing 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 local producers.

Anticipating the tariffs, traders equipped up on utilized cooking oil (UCO), lifting rates of the feedstock, while prices of biodiesel sank in view of diminishing demand for the Chinese supply.

“With hefty prices of UCO partially supported by strong U.S. and European need, and free-falling product rates, business are having a bumpy ride surviving,” stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main type of biodiesel, have halved versus in 2015’s average to the existing $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 typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are improving China’s UCO exports, which analysts forecast are set to touch a 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 locations.

OUTLETS

While many smaller plants are likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market at home and in the essential hub of Singapore, which is utilizing more biodiesel for ship fuel blending, 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 accelerate planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is expected to announce an SAF required before the end of 2024.

They have actually likewise been searching for brand-new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local requireds for the alternative fuel, the officials included.

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