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

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel manufacturers are looking for brand-new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their biggest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.

The EU will impose provisionary anti-dumping tasks of 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 organization that deserved $2.3 billion last year.

Some bigger producers are eyeing the marine fuel market in China and Singapore, the world’s leading 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 amidst examinations. Volumes in the very first 6 months of this year plunged 51% from a year earlier to 567,440 tons, Chinese custom-mades information revealed.

June deliveries diminished to simply over 50,000 heaps, the least expensive since mid-2019, according to custom-mades information.

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, taking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

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

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

However, the boom was temporary. The EU started in August last year 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 undercutting local producers.

Anticipating the tariffs, traders stockpiled 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 significant prices of UCO partially supported by strong U.S. and European demand, and free-falling product costs, business are having a hard time making it through,” stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a main kind of biodiesel, have halved versus in 2015’s average to the current $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan included.

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

Meanwhile, shrinking biodiesel sales are increasing China’s UCO exports, which experts anticipate 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 heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller sized plants are likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets including the marine fuel market in the house and in the essential hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would also speed up planning and structure of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated to announce an SAF required before the end of 2024.

They have likewise been searching for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the officials added.

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