China’s Biodiesel Producers Seek 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 exploring producing other biofuels as supply to the European Union, their most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will impose provisionary anti-dumping duties of in 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 company that deserved $2.3 billion last year.

Some bigger producers are considering the marine fuel market in China and Singapore, the world’s leading marine fuel center, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have fallen sharply because mid-2023 in the middle of investigations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customizeds data showed.

June shipments shrank to simply over 50,000 heaps, the most affordable considering 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, soaking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese manufacturers of biodiesel have actually delighted in fat profits in the last few years, maximizing the EU’s green energy policy that approves subsidies to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A number of China’s biodiesel manufacturers are privately-run small plants employing scores of workers processing waste oil gathered from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was temporary. The EU began in August in 2015 investigating Indonesian biodiesel that was suspected of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and damaging local manufacturers.

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

“With hefty rates of UCO partly supported by strong U.S. and European need, and free-falling item prices, business are having a difficult time surviving,” stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have actually halved versus last year’s average to the current $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan added.

With low costs, biodiesel plants have actually cut their to a lowest level of under 20% of existing capability typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, diminishing biodiesel sales are enhancing 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 tons, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While lots of smaller plants are likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets including the marine fuel market at home and in the important hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

Among the producers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in marine fuel.

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

They have also been hunting 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 authorities added.

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