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 biggest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will impose provisionary anti-dumping tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking 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 hub, as they look for to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen greatly because mid-2023 in the middle of examinations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese custom-mades data showed.

June deliveries diminished to just over 50,000 tons, the most affordable considering that mid-2019, according to customs 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 shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese manufacturers of biodiesel have enjoyed fat profits over 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 small plants using 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 temporary. The EU started in August in 2015 investigating Indonesian biodiesel that was thought 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 undercutting local producers.

Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), lifting costs of the feedstock, while costs of biodiesel sank in view of diminishing demand for the Chinese supply.

« With substantial costs of UCO partially supported by strong U.S. and European need, and free-falling product prices, business are having a difficult time surviving, » said Gary Shan, primary marketing officer of .

Prices of hydrotreated vegetable oil, or HVO, a main type of biodiesel, have halved 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 included.

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, shrinking biodiesel sales are enhancing China’s UCO exports, which experts predict are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the top locations.

OUTLETS

While numerous smaller plants are most likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market in the house and in the important center of Singapore, which is utilizing 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 accelerate preparation and building of sustainable aviation fuel (SAF) plants, executives said. China is expected to reveal an SAF required before completion of 2024.

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

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