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

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel producers are seeking brand-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 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 producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that deserved $2.3 billion in 2015.

Some larger producers are eyeing the marine fuel market in China and Singapore, the world’s top marine fuel hub, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen dramatically because mid-2023 amid examinations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 lots, Chinese custom-mades information revealed.

June shipments diminished to simply over 50,000 heaps, the least expensive given that mid-2019, according to customizeds information.

At their peak, exports to the EU reached a record 1.8 million heaps 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 revealed.

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

A number of China’s biodiesel producers are privately-run small plants using ratings of employees processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.

However, the boom was short-lived. The EU started in August last year investigating Indonesian biodiesel that was suspected of preventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and undercutting local producers.

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

“With hefty costs of UCO partially supported by strong U.S. and European demand, and free-falling item rates, companies are having a tough time surviving,” stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a main 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 prices, biodiesel plants have cut their operations to an all-time low of under 20% of existing capacity usually 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 analysts anticipate are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While numerous smaller plants are likely to shutter production forever, larger like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market in your home and in the essential center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

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

They have actually likewise been scouting 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 included.

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