China’s Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel producers are seeking new outlets in Asia for their exports and checking out producing other biofuels as supply to the Union, their most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will impose provisionary anti-dumping responsibilities of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business consisting of leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that deserved $2.3 billion in 2015.

Some bigger producers are considering the marine fuel market in China and Singapore, the world’s top marine fuel hub, as they look for to offset currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen greatly since mid-2023 in the middle of examinations. 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 shipments diminished to simply over 50,000 heaps, the most affordable given that mid-2019, according to customizeds 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 top importer in 2023, taking 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 enjoyed fat revenues over the last few years, taking advantage of the EU’s green energy policy that grants aids to business that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A lot of China’s biodiesel producers are privately-run little plants employing 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 began in August in 2015 examining Indonesian biodiesel that was presumed of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and damaging local manufacturers.

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

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

Prices of hydrotreated vegetable oil, or HVO, a main type of biodiesel, have cut in half 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 cut their operations to an all-time low 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 increasing China’s UCO exports, which experts predict 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 top destinations.

OUTLETS

While lots of smaller sized plants are likely to shutter production indefinitely, bigger 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 center of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.

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

Companies would likewise speed up planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is expected to announce an SAF mandate before the end of 2024.

They have actually also 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 added.

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